POSTED 7 Apr 2017 - 07:17

What are your best tips for monitoring and improving cash flow management?

As a small business, I find myself running into cash flow problems sometimes. What can I do to minimise these?
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Top Response

LINKFLOW

Cash flow issues for most SMEs in very rudimentary terms usually occur because outflow of cash (trade creditors, overheads, loan servicing etc) happens faster then cash inflow (trade revenue, receivables collection etc). Most SMEs cannot afford the resource nor time to effectively monitor...

Responses

LINKFLOW
13 Aug 2017 - 21:37

Cash flow issues for most SMEs in very rudimentary terms usually occur because outflow of cash (trade creditors, overheads, loan servicing etc) happens faster then cash inflow (trade revenue, receivables collection etc). Most SMEs cannot afford the resource nor time to effectively monitor working capital cash flow position frequently unlike larger companies which can afford CFOs, high end enterprise resource planning software systems. Lastly, small businesses usually lack trade bargaining power of bigger enterprises which can negotiate for longer payment terms to their suppliers/vendors. As a result, most SMEs are 'price-takers' when it comes to dedicating payment credit terms from their customers at the risk of losing their contracts/relationship. SME owners can adopt some best practices of effective cash flow management. Some ways are encouraging customers to pay faster via COD discounts or periodically reviewing credit terms extended. https://smeloan.sg/blog/6-ways-maintain-healthy-cash-flow-position

ALEX@SG
2 Jun 2017 - 13:35

Cash flow problem is not only a problem for small business. It can be a problem for medium size enterprises (> S$10M in revenue).

This happens when
1) No budgeting carried out. Revenue forecast is important
2) Poor management of account receivables
3) Poor visibility of account payables resulting in too much outflow of cash
4) Poor project management resulting delay in project completion and invoicing

Financial management is necessary from a budgeting perspective. The budgeting is carried out at the start of the work year and review quarterly.
Companies can also adopt an enterprise resource management system to address points 2) to 4). Such enterprise resource management will allow visibility of inflow and outflow of cash. Certain systems also have project management tools within.

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SPH1.SG
25 Apr 2017 - 14:49

Find an effective solution for it

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