Cashflow. The lifeblood of your business. The difference between success and failure. This week I was sent a $38,000 debt to collect. Right, pretty standard, nothing to see here- until I saw who owed the money- a massive corporation which everyone in here will know. I ring the CFO, explain the situation and am shocked, literally shocked, when he tells me they can only afford to pay $5000 per week. This company is a household name and it got me thinking- no business, it seems, is immune from tight cashflow. Big or small, public or private, if more money is going out than is coming in, you’ve got a problem. Here are my top 3 ways to avoid cashflow issues:
1. Needs and wants- know the difference. Yes, $1000 worth of branded polos, hats and calendars are going to look awesome but are you going to see an ROI?
2. Save save save- have a cash buffer. When revenue is at it’s strongest is precisely the time you need to be at your stingiest. Is the expensive unlimited NBN plan really needed when the cheaper 300GB plan will do?
3. Don’t order goods or services unless you are certain you can pay for them. Put money aside, pay up front, mentally plan for that payment falling due. Every single debt I’ve ever collected had someone who knew they would have to pay by a certain date. And didn’t.
I hope this helps guys. I don’t profess to know it all and I’m sorry if this sounds preachy, but as someone who sees hundreds of companies go bust every month because of poor cashflow, I like to think I know what it takes to avoid it.
I am also thinking of running a webinar on this exact topic too so if you’d like to be involved just let me know. Cheers