How to plan a SME cash flow

Here are some simple ways your company can improve its cash flow:

1. Prepare a realistic cash flow projection which highlights the source and timing of all inflows and outflows as well as the amount and duration of shortfalls.

2. Stay on top of your current cash flow status by updating your sales, payables, settlement terms and other cash flow projections on a regular basis.

3. Never allow your expenses to get out of control in relation to your revenue. Reduce unnecessary expenses where and whenever possible.

4. Assess all production and financing costs when pricing products or services.

5. Keep abreast of alternative sources of financing as and when they become available.

6. Talk to your banker about obtaining a short-term credit line to cover expected or unexpected cash shortfalls.

7. Manage your accounts receivable regularly and collect overdue accounts swiftly.

8. Work towards establishing a just-in-time operation where materials arrive as needed in order to cut the cost of holding inventory and reduce the risk of stock obsolescence.

9. Tightening credit requirements will increase your company's cash on hand.

10. Obtain credit terms from your suppliers when making working capital purchases.

The quicker your company can move stock and collect receivables and the better your supplier credit terms are, the greater your ability to generate positive cash flow will be.