A business can unlock additional financing and avoid cashflow problems by managing its finances prudently and strategically.
Managing Your Cash
One of the key financial aims of a business is ensure that it has enough cash on hand to keep the business going. That means both getting paid on time and in full by customers and making payments to suppliers and other creditors when they’re due.
Further information on managing your cash is available here.
Managing Your Credit
Much of the focus and energy of businesses is focussed on obtaining credit. Businesses must also actively manage their credit to ensure they can meet their credit repayments and to identify any issues as they arise.
Businesses should work with their bank to manage their credit. Some important steps that help businesses to maintain a good working relationship with their bank include:
- Keeping the bank up to date with the business’s performance, whether the business is doing well or not
- Presenting current and accurate financial information on a regular basis.
- Inviting the bank’s relationship manager to visit the business premises so that they can see how it operates
- Seeking advice and information from the bank, especially if the business has or could have cashflow or repayment problems or if the business is at risk of going over its agreed limit. If the business does go over its agreed limit, it may incur increased charges and it may also affect the business’s credit rating.
- Sticking to the terms of any lending agreement.
Further information on managing your credit is available here.
Managing Credit Policy
Getting paid is crucial to a business’s survival. Clear and comprehensive credit management policies, with the necessary systems and documentation, can help businesses to minimise their exposure to potential credit losses and and deal with late payments or non-payment.
Further information on managing your credit policy is available here.
Good financial planning helps a business to understand its financial situation and needs and to persuade investors or lenders to support it.
Further information on financial planning is available here.