When it comes to advice on cash flow, you can certainly trust Aurik’s CEO, Pavlo Phitidis. He shared these 5 key insights at our latest IAAE Digital Summit.
- COLLECT CASH QUICKLY, PAY SUPPLIERS SLOWLY
It is critical to secure the payment of services on delivery. “This is not an excuse to not pay your suppliers” says Pavlo, rather, you must aim to extend your terms of payment with them so you are able to strike a good balance between paying out suppliers and still having cash in the bank.
- DON’T FORGET TO COLLECT THE MONEY
Many entrepreneurs fall behind on following up invoices for work completed. Once you have done the work, be sure to put systems in place that remind you of when to follow-up on an unpaid invoice that is due. Be consistent in collecting money due to you.
- GIVE DISCOUNTS, BUT NOT ON YOUR PRICE
Giving customer’s discounts is an important part of building trust and relationships, however, you must always give a discount on the volume (quantity) of the product not on the price. For example “buy 2 get 1 free” specials.
- NEVER LET MONEY SLEEP
When there is surplus money (profits) in your business’s bank account, look at options of how you can invest it so it grows interest. Whether its Money Market accounts, linked to your day-to-day account so you have easy access to the money should the need arise, or more fixed investment options such such as 18-month fixed deposits, do not let your money sleep.
- DON’T TAKE ON MORE THAN YOU CAN CHEW
If you can avoid taking on more costs after settling debt, you will be well on your way to maintaining positive cash flow which is key for any successfully lead business.
According to Money Insider (2020), 82% of businesses attribute their success or failure in the industry due to issues of cash flow, getting this right can not only save your business but also propel it to its next level.