Management Skills Crucial for Healthy Cashflow

by Mrs Money

Has your business got what it takes to succeed in the burgeoning UK economy? Improvements in the economic situation can be greeted with relief but did you realise how growth can also be a problem for many SMEs in the UK? Effective cashflow management is crucial at all times, but particularly when a business is negotiating and managing growth. Without healthy cashflow, business growth is stalled and may be affected for years to come. Using effective management skills for your business is one way to successfully enhance cashflow.

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How to Make Business Growth Ideas a Reality: Focus on Cashflow

Many business owners have a wealth of business ideas but lack the key management expertise to get them flying off the ground. It is usually more attractive and exciting to plan new concepts and line up new aims than it is to focus on the day-to-day management of the company but it is through using skills in this area that is essential to driving business growth. For example, managers who can successfully spot cashflow problems in advance and put strategies in place to minimise the negative impact are better able to push forward with new products, ideas, and concepts in the market place.

Key Skills for Cashflow Management: People Skills

While it may be tempting to think that cashflow management skills must be purely financially led, it is important to recognise that people management skills are also crucial. You need to be able to effectively manage the team of people around you, from suppliers to customers and creditors. If you have developed good relationships with creditors and suppliers you will be better able to negotiate better terms on supplies, set up an extension of payment terms, or build a better solution for buying assets. You will also be able to offer discounts to customers in return for shortened payment terms – useful for when you want to build trust and also generate better cashflow.

Key Skills for Cashflow Management: Stock and Resources

It is also important to be able to effectively manage your stock and resources. Do you have cash that is perennially unavailable in slow-moving stock or directed into areas that are usually unprofitable? Monitor stock on a regular basis to ensure cashflow is healthy. Many managers do not fully understand how the cash operating cycle for the company is important for the healthy functioning of the business, particularly when it comes to business growth. The longer the stock you buy is sitting on your shelves, the easier it is to get into cashflow problems. All suppliers need to be paid on time to avoid penalties.

Cashflow Solutions for SMEs

Anticipating periods where you are likely to be tight on cash is also important. Getting access to funds to tide you over during these periods is useful. A quick search revealed providers like ultimatefinance.co.uk offering bespoke solutions for SME cashflow finance. It is important that you anticipate problems and get solutions in advance, before you are already in financial trouble. This requires management skills and expertise in looking ahead and monitoring the long-term health of your company’s finances.

Image courtesy of Serge Bertasius Photography / FreeDigitalPhotos.net

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How to Be Responsible With Credit Cards

by Mrs Money

Irresponsible spending on credit cards often leads to financial ruin. This is because consumers just spend and worry about the bills later. Credit card statements are one of the most ignored pieces of mail. Missing a payment affects your credit and results in more interest being tacked on to your balance, thus reducing your available credit.

Pay Off Balances

If you need to use your credit card, make small purchase like gas or groceries. Pay off these balances when you get the bill. Don’t let them linger by making only minimum payments. It is a good rule of thumb to refrain from making purchases that you cannot pay in full when the statement comes.

While keeping revolving credit active on your credit report it does show financial responsibility in regards to on-time payments. However, the recurring interest does not help you financially.

Pay More than Minimum Payments

If you cannot pay the balance in full when the statement does arrive, at least double the payment or make it considerably more than the minimum amount due. Paying only minimum is not paying down the principal or amount spent, it is merely cutting down the interest

Only have 2 Active Credit Cards

It is a good idea to only have 2 active credit cards. Having multiple credit cards is the leading cause of financial debt. While you may have the income and credit to qualify for multiple credit cards, maxing every card out puts you in financial distress. Two credit cards are ideal because you limit yourself to how much you can spend.

This practice also helps you better maintain your finances balancing out when the payments are due and still being able to make more than the minimum payment due.

Refrain from Frequent Retail Therapy Excursions

Credit cards should be for emergency purposes and large purchases only. Many consumers just spend and spend without thinking about the payments. Retail therapy is a big problem when you have plastic to purchase it with. A good rule of thumb here is, if you can’t pay for it with cash or it is not a necessity, leave it at the store.

Being responsible with credit accounts is important. Bad credit can stop you from buying a house, purchasing a safer vehicle and can even prevent you from being hired for employment.

Many companies require a credit check for new hires, which shows financial responsibility. It reflects on your personal character with a potential employer.

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