Cash Flow Solutions
What causes cash flow problems for business?
In
the simplest terms ... if the money coming into your business is less than the money going out, you've got a cash flow problem. This may just be a short term glitch that you can ride out using your bank overdraft facility, your own personal funds, delaying a payment to a supplier... But, if you repeatedly have cash flow problems or the shortfall continues, putting you and your business under financial pressure, then you need to find cash flow solutions URGENTLY!
Cash flow is the lifeblood of any business. However, many businesses, regardless of size or industry, often encounter cash flow problems that can threaten their survival. To get a better understanding of the causes read our page on Cash Flow Problems. A business can on paper, be profitable with a full and growing orders book, but still fail due to cash flow problems. If your business is constantly under pressure and struggling to balance the cash coming in against the demands for payment to your creditors, staff, suppliers etc.., then the amount of profit you are making and the orders you are receiving, become irrelevant if you don't have and can't raise the money you need to run your business day to day.
You need Cash Flow Solutions! You need both short term cash flow solutions
to get the money coming into your business today, tomorrow and over the coming days and weeks PLUS you need long term cash flow solutions to build cash reserves in your business to keep you out of trouble in the future.
Fortunately, Wood and Disney
are expert at sorting out your cash flow problems to keep your business afloat in the short term with immediate cash flow solutions,
strategies to get you back on track today. Once we have your "working" cash flow under control, we then help you build a stronger business with long term cash flow solutions.
We use our Strategic Cash Retention Programme® to build your business a cash reserve,
to make your business resilient to turbulent economic conditions in the future and enable you to grow your business without the fear of running out of cash.
Cash Flow Solutions - Strategies to get you back on track
Immediate Cash Flow Solutions
Are you struggling to find the money each month, week or day to pay your bills, staff, bank? Then you need to do something about it. The constant battle to keep your business afloat takes a great toll on your mental and physical health. You need to implement Cash Flow Solutions starting right now. Strategies that will bring the money you are owed by your customers in at the right time, so that you can pay the people you owe: your staff, suppliers, bank utilities etc..
Wood and Disney have been helping businesses just like your's get their cash flow under control for many, many, many years. We put in place solutions that are practical to implement, tried and tested, so we know that they work. Below are just a few of the areas we look at. We will develop a strategy that is tailored to your unique business and your needs.
Work on your Business rather than just in it
Planning. We can do cash flow and cash retention analysis
every month or every quarter depending upon the need and advise you appropriately so your business becomes stronger and more resilient so you can cope with both economic downturns and changes in market conditions. Seasonal fluctuations will be anticipated and cash will be put aside to cover those fixed costs which still need to be paid during a low turnover period. Regular meetings with an advisor from Wood and Disney
will change your perspective as well as improve your wealth.
Optimise Stock Management
Adopting efficient stock management
practices is crucial for maintaining healthy cash flow. Regularly analyse sales trends and adjust stock levels accordingly. Implement just-in-time stock systems and negotiate stock drawdown terms with suppliers. You may even find different suppliers who may be slightly more expensive but have much faster delivery times than your current suppliers therefore offsetting the stock holding costs. Wood and Disney
can help you work out your existing stock holding costs and help you identify ways to reduce this drain on your cash resources.
Improving Invoicing and Collections
Invoicing and Credit Control.
Streamlining the invoicing process and implementing a robust collections system can significantly improve cash flow. Set clear payment terms and conditions, send invoices promptly, and follow up on overdue payments. Offering incentives for early payments or implementing automated reminders can encourage timely settlements.
Negotiate Supplier Terms
Negotiating. Engage in proactive communication with suppliers to negotiate more favourable payment terms. Request extended payment periods or explore vendor financing options. Building strong relationships with suppliers can result in mutually beneficial arrangements that alleviate cash flow pressures.
Secure Financing Solutions
In times of cash flow strain, securing external financing
can provide temporary relief. Options such as short-term loans, lines of credit, or invoice factoring can help bridge the gap between receivables and payables. Careful evaluation of interest rates and repayment terms is essential to ensure the financial solution aligns with the business's long-term goals. Follow this link to our Raising Finance Solutions
page
Overstocking
Implement robust financial forecasting
techniques to gain better visibility into future cash flow. By analysing historical data, market trends, and upcoming expenses, businesses can proactively identify potential cash flow gaps and take pre-emptive measures to address them. Regularly revisit and update cash flow projections to reflect changes in business conditions.
Become Debt Free in Less Time
Debt Strategy. If you are suffering from a high debt burden and struggling to meet your repayments Wood and Disney
can help you not only generate more positive cash but also to identify which debts to focus on from a cash flow perspective. Concentrate on the short term high interest debt first and once cleared use the newly available positive cash flow to accelerate the repayment of other longer term debts.
Increase your Prices
Pricing.
The vast majority of small businesses undervalue themselves and focus too much on what their competitors are charging rather than the superior value they are delivering. They think their customers only buy from them because they are cheap rather than perhaps the reality of great service, speed of delivery, friendliness, approachability and a myriad of other emotional connections which customers have with a small business. During 2022 many of our clients were putting their prices up during that high period of inflation as often as every 3 or 4 months and they seldom lost any customers as a result. Wood and Disney
can help you with your pricing and with identifying the true value you bring to your customers.
Reduce Dependency
Risk reduction. Over-reliance on a single product, supplier or customer can expose a business to cash flow risks. Diversifying revenue streams
by expanding into new markets, launching new products, or targeting additional customer segments can help mitigate the impact of fluctuations in a single area of the business. The same applies to suppliers. If you are dependent on a single supplier they will command pricing and delivery. By finding additional suppliers even if they charge a little more initially helps you should the supply market be affected by external influences. The whole idea of risk reduction is to consider these dependencies and look for opportunities to build stability and longevity
High Debt Burden
Debt Servicing.
Excessive borrowing obligations, such as loan repayments or other high-interest payments, can strain a business's cash flow. The need to allocate a significant portion of available funds to debt servicing limits the amount of cash available for day-to-day operations and other essential expenditure. Taking advantage of easily obtained and cheap credit may seem a good idea to keep a business going but it exacerbates the issues further down the line when you may be forced to accept harsh repayment terms at a time when profits are insufficient to generate the cash to cover the repayments.
Implement Cost-Cutting Measures
Cost Management. Evaluate all aspects of the business to identify areas where costs can be reduced without compromising quality or customer satisfaction. This may include renegotiating contracts with suppliers, optimising energy consumption, or exploring remote work options to reduce overhead expenses. Wood and Disney
have developed some tools to assist in this analysis while ensuring that any negative impacts on your team or customers is kept to a minimum.
Cash Flow Solutions for the longer term - Building a Cash Reserve
Strategic Cash Retention Programme ®
Why is it important to have cash reserves in your business?
Once Wood and Disney have put in place Cash Flow Solutions to get your business back on track, with money coming in at the right time and at a level to meet the money going out, then we need to move on and look at longer term Cash Flow Solutions. We need to build a cash reserve in your business to make your business resilient and to support growth.
The vast majority of small businesses have no cash reserves and continue to trade despite their balance sheets often having more liabilities than assets ie they are technically insolvent. To support our clients in building this essential war chest Wood and Disney
have developed the
Strategic Cash Retention Programme®.
Why not just use a cash flow forecast?
Traditionally cash flow forecasts are the tool of choice, used by business managers and accountants to predict cash inflows and outflows to a business. But cash flow forecasts are not necessarily helpful during a time of uncertainty. A cash flow forecast may show that a business can afford to borrow more money or that a cash crisis is due to occur but unless you think strategically and start to build reserves then your business will always be hit by the unexpected (or even expected) downturn. That is, a cash flow forecast may warn you about an upcoming cash shortfall in your business, but it is just a tool. It is not a long term cash flow solution.
It doesn't on its own prevent the cash flow problem occurring.
Wood and Disney's Strategic Cash Retention Programme®
is a cash flow solution
that uses cash biased bench marking based upon our most successful and resilient businesses. In essence we compare your business to this ideal bench marking and advise you how you can improve your cash position and build cash reserves into your business.
We ask the tough questions such as:
Wood and Disney's Strategic Cash Retention Programme® starts with having a strategic plan and setting goals so you stay focused on retaining cash. By understanding where your money is being spent you regain control and can either reduce/eliminate any borrowing or build cash reserves to achieve financial freedom.
- Are you retaining enough cash to support future growth?
- Are you provisioning for all known liabilities even those which may be due more than 12 months away?
- Are you overspending on overheads?
- Are your shareholders taking too much out in dividends?
- And then from a practical basis are you removing from your day to day operating bank account the various provisions for liabilities that will need to be paid or repaid in the short and medium term such as VAT and Tax? Once you have done this you are building genuine Working Capital to help support growth in sales.
Wood and Disney's Strategic Cash Retention Programme® starts with having a strategic plan and setting goals so you stay focused on retaining cash. By understanding where your money is being spent you regain control and can either reduce/eliminate any borrowing or build cash reserves to achieve financial freedom.
Wood and Disney's Strategic Cash Retention Programme®
builds on the idea of “Free Cash” as opposed to “Trapped Cash” which will become increasingly important to a business owner when they come to sell their business and want to maximise its value and therefore increase their own personal benefit.
If you are interested in being strategic and building resilience with long term cash flow solutions rather than just juggling cash every day you need to contact us.
Call us on 01206 233 170 to talk about how we can help you build your long term resilience.
Find out more - Blogs on Cash Flow and Building Resilience
Why Strategic Cash Retention trumps cash flow in a recession. Emerge stronger, and claim your rightful place as a post-recessionary leader.
Building a business as a long term asset not just a short term cash generator will help you focus on growth without the drain of loan repayments.
Relevant Life Insurance. What is it and why is it important to strengthen and protect your business?
Business owners need something more than a traditional cash forecast to build resilience into their business in the future.
Today, the need for financial stability and resilience by directly strengthening cash reserves is better for the long-term future of your business.
Lessons learnt in building resilience into Wood and Disney
Read about the experiences of one of our clients and how we challenged his cash strategy to strengthen his business for the future.
More businesses go bust through lack of cash than from lack of profit. Growth is great but you need to have the cash to finance and support your growth.
At Wood and Disney, we are dedicated to supporting your business growth and positive cash flow
Cash flow problems are a common challenge faced by businesses, but with proper understanding and proactive strategies, they can be effectively managed. By addressing the root causes of cash flow issues and implementing practical solutions, businesses can improve their financial stability, maintain operational continuity, and position themselves for long-term success. Regular monitoring of cash flow, effective financial planning, and open communication with stakeholders are key to ensuring a healthy and sustainable cash flow for businesses of all sizes and industries.
Talk to us about how we can help you solve your cash flow problems
