Cashflow insights

In the fast-paced business world, success is often measured by a company’s ability to generate profits and grow its market share. However, effective cash flow management is an equally crucial, yet sometimes overlooked aspect of maintaining a thriving enterprise.

Cash flow management is about ensuring that your business has the right amount of cash at the right times to meet its obligations and seize opportunities. This foundational practice keeps the lights on and paves the way for sustainable growth and resilience in the face of economic uncertainties.

By strategically managing cash flow, businesses can enhance their financial stability, improve their ability to invest in innovation, and build stronger relationships with stakeholders.

Possible practical ways to improve cash flow:

Below is a list of possible changes that can be made to improve your business’s cash flow. The list is not comprehensive, but we hope this also sparks other creative ideas to improve cash flow.  As the dynamics of each business are different, what might work for one business, might not work for another.

You might think you do not have the time now, but you will reap the benefits in the future if you take time to stand still and analyse your business’ cash in and outflows.

Often just making a lot of small changes, can have an incremental impact on the future.

• Increase revenue and other income:
  • Consider diversifying your offering, resulting in more than one revenue stream. In this way, should one revenue stream decline, the other revenue streams might make up.
  • Small incremental price increases. Always consider the market price to ensure your prices are still competitive.
  • Hosting promotions might help to boost the quantities sold.
  • Utilisation of assets: Can the same production machine also produce other products?
  • Explore less expensive ways to do marketing.
  • Depending on the nature of the business, it might be beneficial to explore entering monthly retainers with customers. This may provide a steady income which makes predicting your cash inflows easier.
  • Optimal usage of buildings and assets: Where can you rent out and earn a passive rental income? For example, perhaps a portion of your premises can be rented out. Or perhaps boardroom facilities can be rented out to other smaller business owners. Perhaps other underutilized assets can be rented out.
  • Utilising investment opportunities to earn interest and dividends.

• Decrease expenses:
  • Is load shedding affecting your business? Perhaps consider power solutions such as purchasing or renting a solar system to keep your business going and generating revenue consistently. This might also have certain tax deduction benefits.
  • Obtaining Jojo tanks to save on water expenses.
  • Regularly update the assets listed with your insurance to ensure that you are not overpaying on your insurance.
  • It might be beneficial to regularly obtain competitive quotes for telephone, internet, insurance, and other fixed monthly expenses. Perhaps another service provider can provide a better package at a more competitive fee.
  • Limit paying personal expenses through the business, which might eat into your cash flow which could be used otherwise.
  • Optimise the usage of staff and skills within our business.
  • Consider optimising salary structures.
  • Paying commissions to staff for good performance and sales might assist with keeping a balance between staff costs and revenue earned.
  • Limit unnecessary expenses such as entertainment.
  • Keeping a balance between online and in-person meetings might save travel time as well as travel costs.
  • Considering a hybrid office policy (working at the office vs working from home) might save utility, internet, and other costs.

• Liabilities:
  • Renegotiate financing agreements to get better interest rates or repayment terms.
  • Consolidating debt might be beneficial if it results in lower monthly repayments.

• Customers and suppliers:
  • Refer to the debtors and creditors article on the next page.

• Other:
  • Where possible, put money away in a savings account for those rainy days.
  • If you are VAT registered, when receiving payments from customers, already put aside 15% in a savings account to ensure you have funds available should you need to pay SARS.
  • Analyse your property and needs vs costs. What would be best: renting or buying a property?
  • Time equals money, and still using outdated systems and software might cost you both.

It is important to plan your cash in and out flows in advance. Spending money according to a plan will provide you with more control over your funds as well as enable you to predict cash outflows. This might also eliminate unproductive spending.

Managing your cash flow is an ongoing process. As it is important to implement changes that will improve cash flow, it is equally important to monitor the results to see whether you are staying on track. Ask your account manager to analyse your cash flow regularly to confirm the effectiveness of the changes made and whether any further changes might be necessary.

We are also kindly sharing this link to a simple cash flow forecast template you can use and customise for your business. This template can also be used to plan for your month-end cash in and out flows:

Simple Cash Flow Forecast Template