E-Book Overview
Understanding your cash flow is vital. Cash Management helps you to keep track of how much money you're making (or not). Chapters include: understanding cash flow, knowing where the money is, the rules of credit management, reducing debtor days, influencing non-paying or slow-paying customers, and managing stock.
E-Book Content
Cash management . . . on a Shoestring Cash management . . . on a Shoestring Tony Dalton First published in Great Britain 2007 A & C Black Publishers Ltd 38 Soho Square, London W1D 3HB © Tony Dalton 2007 All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying or otherwise, without the prior written permission of the Publisher. No responsibility for loss caused to any individual or organisation acting or refraining from action as a result of the material in this publication can be accepted by A & C Black Publishers Ltd or the authors. British Library Cataloguing in Publication Data A CIP record for this book is available from the British Library. ISBN: 978–0–7136–7706–5 eISBN-13: 978-1-4081-0247-3 This book is produced using paper that is made from wood grown in managed, sustainable forests. It is natural, renewable and recyclable. The logging and manufacturing processes conform to the environmental regulations of the country of origin. Design by Fiona Pike, Pike Design, Winchester Typeset by RefineCatch Limited, Bungay, Suffolk Printed in Italy by Rotolito CONTENTS Foreword 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Introduction Where’s the money? The cash-flow chart Maximising your assets The business plan Getting paid more quickly The order is only complete when it’s been paid for The rules of credit management Not only, but also . . . Reviewing your terms of trade Protecting yourself against slow or non-paying customers Working successfully with creditors Controlling stock The 10% rule Staff: A warning Reducing your cost of sales figure Good debt/bad debt Improving your relationship with the bank vii 1 7 21 29 45 55 62 67 74 79 83 93 101 115 131 136 150 154 v CONTENTS 19. 20. 21. 22. Zero-interest borrowing Have you ever heard of . . .? Discipline Think cash! Index vi 168 176 180 186 189 FOREWORD Have you ever looked at a growing pile of invoices you can’t pay and felt the panic mount? I have. Money worries affect all small business owners at one time or another. The pressure to cope is intense, and dealing with financial difficulties can leave you feeling isolated. There is a lot you can do to help yourself, though, even when things seem at their bleakest, and reading this book is an excellent first step. It will help you to cope with many of the financial challenges business life throws at us, using proven techniques to help you manage your cash more effectively and get the results you want. The information/reality gap There’s no real way to learn how to run a business other than getting out there and doing it. Yes, Business Link and other organisations run courses to help you with the nuts and bolts of setting up, but beyond that, you’re pretty much on your own. Other establishments and consultants offer relevantsounding training, but not all of them are based on first-hand experience of running a small business. If you’ve never had to vii FOREWORD worry about when the money’s coming in yourself, it’s hard to offer relevant coping strategies to people who do need to worry about it. When you were preparing to start your own business, you should have worked out a simple cash plan that showed how much money you needed each month to cover expenses, as well as how much you expected to get in each month, in