Tips To Improve Cash Flow; Improve Debtor’s aging; Requests for a deposits / tightening credit requirements Issue invoices promptly and follow up immediately if payments are slow. Give On Time Payment Incentives (2%) or early payment discounts (5%) to customers Insists on COD for slow paying customers instead of refusing to do business Increase Creditor’s […]
Factors Impacting Cash Flow; Pay close attention to cash cycles: Debtors Creditors Inventory Fixed obligations/payments (Staff costs, Rentals, Utilities, loans) Price Point – as explained yesterday, as owner we need to ensure our pricing are sufficient to cover our COGS & yet still be competitive. DON’T ever go into a price war, unless you have […]
In my previous sharing, an Entrepreneur must not neglect their Cash Flow Management -> It is a process that tracks how much money is coming into and going out of your business. I’ve created a simplified spreadsheet to help them managing their cash flow in a proper manner. Please complete the following field. The file/link […]
As Business owners, have you encountered the following scenario; Always need to constantly putting your own money to finance the business/operations? Your Sales is 2x of last period but still you need to find funding for your business operation? You know your company is making nett profits but your bank book is always in the […]
In this coming days, I will share on topics related to cash flow management & cashflow budgeting. Cash Flow Management -> It is a process that tracks how much money is coming into and going out of your business Importance; Helps to predict how much money is available in your business for (near) future use. […]
You have now understand debt ratio and debt-to-equity ratio but suddenly you hear people asking you, “what’s the gearing for your Company”. Would you go scratching your head & say “erm… I dunno leh”…. Well actually you know it, Gearing Ratio is actually a category (big umbrella). Since you have now understand the individual ratios, […]
Debt-To-Equity Ratio; Indicate how a company/business is financing its operations (ie through debt vs wholly-owned funds (equity/capital) Formula: Total Liability / Total share equity Importance: Determines the financial risk of a company. A ratio greater than 1 indicates that a significant portion of the assets are funded with debt and that the company has a […]
The following few days we will focus on KPI (Liability side). Debt Ratio: indicates the percentage of a company’s assets that are provided via debt Formula: Total Liabilities / Total Assets Importance: Determines the financial risk of a company. A ratio greater than 1 indicates that a significant portion of the assets are funded with […]
Cash Reserves KPI; Indicate how many days your business could last if the income suddenly dried up. Formula: [Cash & Bank Balances] / (([Annual Expense (non COGS)]-[Non Cash Expenses]) / 365)) Importance: Offers a good indication of the strength of your cash position. It will tell you more than the Cash Balance itself. Note: Cash […]
Average Debtor Days: Indicate how many days (on average) the debtors owe you. Formula: (Total Debtors / Total Revenue) * 365days Importance: An indicator of how fast/slow a debtor pays you back & also may indicate potential bad debts problems. Note: What’s good and bad will depend very much on the industry you’re in and […]
