Unlock your cash flow and grow your business in 2020. Of course, you can continue to borrow money. However, Marketlend has noticed that some of our most successful customers have put in place standard practices that allow for the extraction of maximum cash flow based on their ‘run-rate’ trading conditions.
Here are the top 5 things you can focus on right now to set up your business for success and growth in 2020:
1. New Year / New Terms:
Speak with all of your suppliers and discuss payment term options. What options do they provide for extended payment terms? If you’re a valued customer of the supplier, there is a fair chance that they will be willing to negotiate to ensure that you remain a customer (see #4 on our list below – whatever your suppliers are willing to do may be advantageous to utilise for your own business model).
Additionally, look at the terms you have with your top customers – what options do you have to accelerate cash coming into the business? Can you offer a discount for early payment? Can you leverage UnLock to speed up cash flow for you and provide a cash flow benefit to your customers as well?
2. Map your supply chain – understand the cash bottlenecks:
Mapping your supply chain is often the best starting point for any business. Review each stage of your supply chain, the amount of cash flow tied up at each stage and the timing of cash flows end to end and between each stage. Understanding the detail of your supply chain will help you identify the cashflow bottlenecks and opportunities to unlock cash for business growth.
3. Clear out dead stock:
Take a good look at your stock turnover and stock on hand. We often see stock as being a significant bottleneck for cashflow and a substantial restraint on business growth.
Understanding your supply chain and the velocity of stock turnover will help. Look for opportunities to reduce stock on hand or increase sales to your existing clients through discounts and improved terms. Helping your clients to improve the velocity of their supply chain can be one of the most straightforward and inexpensive cash flow solutions for you.
4. Look at growth and retention through existing customers:
Like you, many of your customers will be looking at their cash flow at this time of the year. Adopting a proactive approach can help not only to demonstrate the value you place in your customers but can differentiate you from your competitors.
Engaging in early dialogue with key customers about their growth plans for 2020 and discussing how you can support them in the future can be a great customer retention approach. Also, take a good look at your under-performing customers.
Many good businesses will churn up to 20% of the customer base by tightening up the operating approach with poor performing customers through higher prices, shorter terms, stronger late payment penalties, and volume discounts.
Although you may lose a few of the less profitable customers, you’re creating a growth opportunity by making room for better customers.
5. Get your debtor under control – NOW
During the first quarter of a new year, Marketlend notices a consistent issue occurring year after year. Many businesses are waiting for debtors to pay them so they can get their cashflow kick-started. Get on top of your debtors immediately and don’t wait until the due date on invoices to start chasing payment.
The unfortunate reality of quarter one in the new year is the adage of “the squeaky wheel gets the grease” (in this case the cash). Make sure you’re chasing early and often. Don’t succumb to the self-talk of “I’ll lose customers if I chase too hard”.
If they can’t be respectful enough to pay you on time, then their loyalties generally lie somewhere else. Quarter one can set you up for a steady growth trajectory, however, it can also limit your growth opportunities before you even get started.
Quarter one of 2020 is a great time to discuss UnLock for your business. We’re helping businesses like yours every day to drive growth through cash-flow solutions.
Email us at firstname.lastname@example.org for more information or call us on 1300 257 387, another product proudly brought to you by Marketlend.