Cashflow in a Crisis North Shore Accountant Shares Top 4 Survival Tips

Local accountant and business development expert, Butch Mawdsley shares his top cashflow management strategies proven to work for North Shore businesses.

Even profitable businesses can go broke if they do not effectively manage their cashflow during the recession, according to Butch Mawdsley partner of local accounting firm RES Business Development and 10X North Shore.

According to Butch Mawdsley cashflow represents one of the major concerns of business owners, with 92% frequently experiencing stress as a result of it, and a significant amount having to source additional funding, reduce their operations, and even take pay cuts to accommodate it within their business.

Butch says cashflow problems have now been worsened by the recession. “There are now fewer customers and leads and increased operating costs for local businesses,”. “Knowing how to manage your business’s cashflow is critical. In fact, the key to surviving the recession is strategic cashflow management.”

Butch Mawdsley, who coaches North Shore businesses in his 10X Coaching Club, has personally seen how easy it is for business owners to transform the cash flow situation in their business having if they implement his recommended cashflow management strategies.

Butch shares his Top 4 cashflow management strategies:

1. Set goal-oriented budgets - and proactively manage them. “Profit and loss budgets are obviously important in providing you with direction on where to spend, and where to save,” says Butch “However, it is cash flow budgets will break down income and expenditure and really guide how you manage your cash requirements and shortfalls.”

2. Focus on increasing sales and income – a feat that, even during a recession, is possible. “It’s all about being proactive, and really providing benefit to your customers. Business owners need to identify creative ways to increase retention rate, generate leads, and increase conversion.”

3. Avoid easy tactics like discounting, which Butch says can be dangerous to business profitability. “Even a 10% discount can result in your business having to increase sales by 100% to achieve the same gross profit pre-discount,” says Butch.

4. Reduce the cashflow cycle by implementing a debtors collection system and credit policy, collecting debtors faster, selling stock more quickly, and negotiating longer credit terms with creditors – all of which will free up more cash for your business.

Butch shares a real-life example of a husband and wife team, who were facing the harsh reality that their business cashflow was unable to pay weekly fixed expenses and that debtors finance was restricted due to excess over 90-days. Together with their 10X Coach, they developed a process to handle debtors with 3 letters. They also received coaching through various role-plays on how to handle difficult telephone calls. After implementing this strategy, the couple were able to turn around $28,000 in the first week, debtors over 90 days reduced and after 2 months debtor finance released an extra $20,000.

As Butch Mawdsley stresses: “Cashflow represents the lifeline of all businesses, and with the right resources and support, North Shore businesses can ensure that their cashflow is effectively managed for survival through the current crisis.”

10X North Shore is committed to supporting the ongoing success of local business owners, and is offering a series of free teleseminars available to the North Shore business community. “Cashflow in a Crisis” is the first in the series, and is available for business owners to register for free via www.10x.com.au/free-teleseminar. Business owners who register can also submit their own cashflow questions to be answered by 10X experts during the teleseminar.

Further reference information:
www.10x.com.au/northshore


* Statistic taken from NAB survey, Nov 2008