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Turnover is vanity, profit is sanity but cash is reality!
by Peter Fleming

If your business is expanding or you are challenged with slow sales, holding a lot of stock, have high work in progress or slow paying customers, ensuring you spend time managing your cash-flow is vital.

According to the Office for National Statistics (ONS) only 45% of start-up businesses survive beyond five years, 70% of VAT registered business don’t trade past 10 years. A number of other studies also show that 80% of these business failures are due to bad cash flow management.
So whilst turnover and profit are important the vast majority of business failures are due to their cash flow drying up.

Business failure is not just due to poor sales or poor service, many business failures can also be due to over trading, i.e. rapidly increasing sales and taking on large orders which they struggle to fund

So what steps can you take to ensure that your businesses doesn’t become a casualty and part of the above statistics?

1. Create a plan 

2. Know your numbers

3. Protect yourself against bad debt 

4. Get paid promptly

5. Understand your sales cycle 

6. Offer discounts for prompt payment

7. Chases debtors 

8. Pay your suppliers on time

10. Keep in touch with your bank 

To read more information and to read the full steps to managing your cash flow click here

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