Go with the cash flow, small business owners told
Tuesday 7th April 2009, 2:44PM BST.
ENSURING small businesses have as much cash in their reserves as possible is more important than ever, according to Brehon Chartered Accountants director Sarah Hancock (pictured).
She was speaking at the latest Chamber of Commerce breakfast seminar and advised owners of small companies if they had assets that they barely used to sell them and to turn them into cash, especially in a climate where banks were making it harder to borrow.
‘Those businesses with cash will survive in a recession and those that don’t have it won’t.
‘In many cases there are good small businesses out there but because they haven’t got the cash, they have to close the doors.’
Mrs Hancock said establishing the liquidity of a business was now vitally important, with a reported 120 small businesses being allowed to go the wall each day by banks in the UK.
‘Businesses need to think about who owes them money and how long it will take them to pay and about how long they will need a good level of cash for, whether it be three, six or 12 months.
‘If your customers start paying you more slowly and you haven’t got the cash yourself to pay your own staff and suppliers, there is going to be a ripple effect.’
Her advice was not to fall into the trap of invoicing late and to be assertive.
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Maybe Sarah should be our Treasury Minister because her advice is just as relevant to the States.
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Perhaps the article above is stating the obvious…..?
And remember, assets are not easily disposed of when the market is so poor.
As such if you are not desperate then dont sell assests needlessly as you may not get good value.
And maybe you might be able to come to agreement with some creditors to exchange assets to settle debt.
I think that aswell as maintaining good liquid reserves as all businesses should do regardless of economic conditions, businesses need to think outside the box for business solutions.
Further advice would be to spend time forecasting cash needs to the best of your ability, to keep all paperwork as up to date as possible, and work with your business partners to achieve desired business goals. Regular contact with suppliers and customers and bankers etc aswell as good internal communications, will ensure good working relations, and any problems will become apparent sooner and thus accommodated & dealt with more quickly and with greater chance of success.
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