What can businesses do to avoid wasted cash spend?
The number one thing to remember with working capital is that cash is king. To improve working capital, the first thing a business should do is to find out where there are opportunities in their supply chain to restructure and protect cash. Sometimes a strategy change or unexpected circumstances may change the level of service you need from a supplier, despite being in a contract with them.
In these cases, it may be that with existing suppliers and manufacturers, they offer other services or products which are of use to your company. By bundling these offers into existing contracts, it helps to avoid paying penalty clauses and preserves the cash flow of the business. The supplier gets to keep the contract in place and as a business, you know that you have minimized cash wastage.
To improve working capital, the first thing a business should do is to find out where there are opportunities in their supply chain to restructure and protect cash
To improve working capital, the first thing a business should do is to find out where there are opportunities in their supply chain to restructure and protect cash
How important is accounts receivable in the current economic climate?
If cash doesn’t come into a business, then it goes without saying that the business will soon become unviable. Businesses need to be aggressive at bringing cash in, especially with managing their accounts receivable. Customers cannot owe you for long periods of time in the current economy, it simple isn't sustainable
To achieve a positive working capital position, some businesses may need to redeploy their resources and focus more heavily on debt collection. A business’ debt collection team should be strong and aggressive so that they never have to sit and just wait for their customers to pay.
To achieve a positive working capital position, some businesses may need to redeploy their resources and focus more heavily on debt collection.
To achieve a positive working capital position, some businesses may need to redeploy their resources and focus more heavily on debt collection.
What other levers do businesses have to improve their working capital?
If you’re not selling, then you’re not in the game. It really is as simple as that. Spending efficiently and recovering debt as we talked about before are hugely important, but the single largest lever that a company can control their cash flow with is revenue.
This is why understanding who your target customers are and where your money is coming from is so important. It may sound simple enough, but the size and importance of this task for growing revenue should not be underestimated.
Understanding who your target customers are and where your money is coming from is so important.
Prue Matlhola
Financial Director
Understanding who your target customers are and where your money is coming from is so important.
Prue Matlhola
Financial Director
Prue is a Finance Executive and qualified Chartered Accountant with over ten years of experience.
Share this page
Produced by TechPros.io
Produced by Techpros.io
Share this page