This month we catch up with Robert Anderson, Partner at Streets Chartered Accountants, who discusses where you can find cash in your business.
Businesses are finding trading challenging with reduced working capital and access to cash placing even more of a strain.
There are ways of raising cash without resorting to putting your hands down the back of the sofa. Focus on more profitable areas including customers, products or services because if you identify these and concentrate on them as opposed the less profitable or loss making areas it is possible to improve the overall cash position.
If you offer credit, it might be a good time to look not only at checking the credit worthiness of your existing and new customers, but also adopting a more rigorous debt collection process.
Remember, a sale is a gift until it is paid for. Unfortunately, it may be necessary to consider reducing the amount you take out of the business. It may however be possible, with advice on remuneration planning, to maintain or even increase your drawings without affecting the burden on cash.
Often cash is tied up in slow moving, even obsolete stock. A review of your stock inventory and approach to stock levels can be a very effective way of releasing cash back in to the business.
If you haven’t reviewed terms with your suppliers, it might be a good time to negotiate new and more favourable terms and take credit where credit is due Review your funding structure as most businesses still tend to rely on overdraft and loans for finance, there are however a growing number of funding options available. A review of other funding streams, even use of business angels, helps to leverage additional working capital.
Maximise the tax reliefs available as businesses can find they have paid more tax than they may have needed to if they do not have specialist advice. A review of overall tax burdens and the tax reliefs available can be a very effective way of helping to inject cash into a business.
These are just few ideas on how a business can generate cash and improve its overall position. For further ideas it is undoubtedly worth seeking the advice your accountant and tax advisers.