The King of Cashflow: want to manage your cashflow? Get on top of your supply chain

First things first, if your business is hemorrhaging cash then the answers not to throw more money at it. That's a short-term solution that will never solve the problem. To make a heart healthy you need to eat well, exercise more and reduce the old stress levels - it's similar in cashflow. You can't mend your unhealthy problem of losing cash with a financial fix. Instead you have to focus on your supply chain and take measures to make sure it's operating more efficiently.

Follow the goods

If you can get your goods or services to your customer quicker, then the faster your customer will pay you, simple. So you need to examine the entire process from the initial sale all the way through to invoicing.

Let's start with the sale. It's essential that small business owners know how much is being sold at any minute. How much went yesterday? How much is going to sell today and even what the sales figures will be like tomorrow and the rest of the week. Every item that's stuck on a shelf represents dead cash. Turning these into sales is what gets the cash flowing and your business growing. It's also vital that you move quickly to replace sold or out-dated goods. The more accurate your sales predictions, the better your flow of stock will be. Of course it's a guessing game, but you need to work out a formula that brings your sales predictions as close as possible to the actual figures.

Once your sales are moving smoothly, the next area to focus on is meeting the sales demand. When a customer places an order, what happens behind the scenes? If sourcing and moving goods forward is a long manual process that sometimes delays goods reaching the customer, then it's worth looking at how you can streamline the process. Are there new technologies that can help make the movement more automated and efficient?

This about how these goods gets to you too. The cheapest form of transportation is usually the slowest, which means it takes longer for you to get paid. Sometimes spending a bit more on transportation will improve your cashflow.

Track everything

Whether it's for your shop or a part you need to fix a customers car, it'svital you know where your goods are once you've ordered them. Have a tracking number for everything. This means you'll know when you need to sell other stock by and will allow you to get an invoice out as soon as possible as you'll know when it lands in a customers hands. It should be the case that as soon as it's confirmed the customer has what they ordered an invoice is automatically triggered.

So there are my tips to make sure the flow of cash around your business is not too dissimilar to the flow of blood pumping around a finely tuned athletes body.

Yours Truly,

The King




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