How to save money ideas for business

15 Ways to Improve Net Cashflow

Posted by on 17 November, 2009 at 2:38 pm

There are many ways of improving Cash Flow for a business and we have given you a few ideas to do just that.

To help you see how these ideas can help your business it would be worth while doing some cash flow projections. The Cash Forecaster can be used as a management tool to identify critical costs areas of the business and how these impact the future cash-health of the business.

For example – you might like to experiment with introducing Factoring or Invoice discounting to improve the flow of cash from your customers whilst you are in expansion mode – Just because a business is making a profit it might still fail if the profits are not turned into cash – Remember ‘Cash is King’ in business!

You may have heard of the term ‘Over Trading’ – Over trading is where a business is making good sales and turnover but that it is not able to keep up with the payments to suppliers simply because their customers are late in paying the company. The obvious way to correct this is to make sure that your payment terms to your suppliers are more generous than those given to your customers. Alternatively, the introduction of Factoring will help.

Having a Cash Flow Management tool to hand will help you to explore the effect these ideas will have on your business:

1. Increase sales and in particular those involving cash payment or payment by either standing order or direct debit.
2. Reduce your direct and indirect costs and overhead expenses.
3. Consider increasing your prices and especially to your slow payers – see Bowraven’s “Profit Increase Software
4. Review the payment performances of customers and be more selective when granting credit – start using a credit report company to check the credit worthiness of potential customers.
5. Consider up-front deposits or multiple stage payments – approach a loan company to advance the money to you and offer credit terms to customers.
6. Reduce the amount of credit given to customers and change your payments terms – i.e. reduce the time allow for customers to pay.
7. Introduce factoring or invoice discounting to accelerate receipts from sales.
8. Make sure that your sales invoices are raised as soon as the work has been completed.
9. Offer early payment discounts and consider introducing late payment charges or fees.
10. Generate regular reports on receivable ratios and aging or your customer balances and use more pro-active collection techniques – involve your sales team and make sure that any commissions are only paid where customers pay the company.
11. Consider the 80/20 rule with regards to your customer list and product lines – make sure you know where your profits are coming from. You might well find that 80% of your profits are coming from 20% of your customers or 80% of your profits from 20% of your product lines – if either of these are true consider not dealing with the 80% of customers and cancel the 80% of non profitable product lines. Be careful when do this, as it might be that certain products are reliant on others, in which case they may be ‘Loss-Leaders’.
12. Take a look at how you pay your suppliers – ask for extended credit terms. Get new quotes from other suppliers and re-negotiate prices of supplies.
13. Try to reduce your stock levels (inventory levels) and improve control over work-in-progress – make sure that you are billing work in progress on a regular basis and keep write-offs under review.
14. Sell off or return obsolete/excess stock (inventory).
15. Defer or re-stage all capital expenditure.

Planning these changes and which ones work best for your business can be done using our tried and tested Cash Forecaster.

Post by Russell Bowyer

10 ways to save money in your business

Posted by on 3 May, 2009 at 1:07 pm

10 ways to save money in your business and make your business a lean mean fighting machine!

In an economic slow-down it is time to cut costs!

When things are going well and saving money is not at the top of the agenda we can all let things slip and not pay close attention to cut costs. With the credit crunch still biting the majority of businesses still I though it would be good to help focus on where money can be saved.

1. Bank charges

If you have been with your bank for a number of years and many people tend to be very loyal to their banks, for some reason. Always remember this, if times get tough, the bank will be the first one to kick you out on the street, as their decision is based purely on a commercial basis without emotion. So it is always good to have a look at the competition and see what deals you can do with other banks and the bank charges you pay or save.

2. Bank loans

You might well have banking finance in the company be it a general loan or overdraft or it might be in the form of a mortgage on a business property. It is always worth while checking to see if you can get a better rate, especially right now with bank base rates being so low. The rate your are already on might not take account of the full rates reduction, so by moving lender you might get a better deal or even a very good fixed-rate deal.

3. Company credit cards

If your business uses credit cards then these will have an associated cost, be it an annual fee or the fee they charged if you use it abroad on business. Check with other banks how much they charge for a similar service, as you might be able to save some money where the cards are used in a significant way.

4. Pay-down your mortgage

Where interest rates have dropped so much your mortgage payments will have dropped by a large percentage. However, if you can afford it, why not keep your mortgage payments at the level they were before so that the capital element of the mortgage gets paid down faster.

In the long-run this will significantly shorten the length of your mortgage and reduce the amount of interest you pay over its term. Also, at a point when rates start to rise again, the amount you owe will be that much lower so the repayments at that point will be lower.

5. Review your supply chain

You might have ordered your stationery from a certain supplier for some time now and it might be that there are other companies out there that offer a better deal. There will be companies eager to get your business and might be willing to give you good account discounts to get your business.

Equally, your existing supplier might well give you a better discount if you ask them and more likely if they know they might loose your account. This saving tip applies to all of your supplies and where you are a manufacturing type business and you purchase goods to sell, then if you can source cheaper suppliers for your business, you will improve your gross profit margins.

6. Cash takings

If you are a cash business you might already try to minimise the amount of the cash you bank and instead use it to pay suppliers, employees and so on. Banks charge you significantly to bank cash so if you can limit how much you pay in this will reduce these costs. You might also want to look at other ways of banking your cash, for example the UK’s Post Office has always been a cheaper solution for banking cash, so it might pay to look around for banks that charge lower “Cash-Banking” rates.

7. Save money on your fuel bills

Even during this economic slow-down the cost of energy has remained relatively high so it would pay you to search around for a better deal. You can normally search online for Energy Comparison Sites so that you can cut your fuel bill on gas and electric. Sometimes by combining the two into one bill and by paying by direct debit will save money – so take time to speak to different companies.

8. Cut your phone bills

For some businesses the phone bill is one of the high costs and by switching supplier can reduce this cost. Look at getting a deal whereby the landlines you use are linked in some way to your company mobile phones so that calls between the office and the mobiles can be free with certain deals on the market. Consider incentivising your employees to switch to your own service provider where call-charges are cheaper when made between the same supplier and the business makes a significant number of calls to employee mobiles.

9. Accountants fees

Accounting and professional fees can be a significant cost to the business and it is always worthwhile reviewing not only the cost of this service, but also whether the accountant you use is saving you money. If you have a good accountant and tax adviser, they should be able to come up with tax-saving tips for your business and if you change the new person might see something that your old accountant has missed.

Also, try looking for an accountant that this prepared to offer a fixed fee – you end up paying too much to accountants or solicitors that charge by the hour, as you are paying for their inefficiencies if you pay them by the hour!

10. Company car policy

Review your company car policy and how often you change your vehicles and for what level of car you buy as a replacement. Also, consider the fuel type your company vehicles use – there are obviously petrol versus diesel and now you have the new types including electric cars and a combination fuel type car.

These are just 10 ways to save money in your business, but if you start to think this way then I am sure that you might well come up with your own ideas to help reduce costs in these difficult times.