SME CASH FLOW HAMPERED BY POOR PAPERWORK
September 2012 - Businesses struggling with cash flow problems are making life more difficult for themselves by poor paperwork practices, says expert
Simon Thompson, CEO of Lock Finance and a part-time consultant to the World Bank, will tell a meeting organised with Business Mentors New Zealand in Christchurch next week (2nd October) that: `Disorganised invoicing, poor accounting systems and ongoing avoidance of debtor collections are hampering the SME sector’s attempts to tackle its cash flow problems.’
The Canterbury meeting aims to help business mentors assist client companies get to grips with their cash flow difficulties. Business mentors report that managing cash flow is the number one problem facing SMEs and it is a major issue for companies seeking assistance from Lock Finance which has specialised in business financing since 1889..
Simon Thompson warns: `Although the level of confidence is improving SMEs must be careful to keep their paperwork in order to keep their cash flow coming through. We are still finding clients who are not promptly invoicing or following up payments which widens the gap between money going out on wages, materials and running costs, and the money coming in for work completed.’
He points out that: `If your business accounts are disorganised, it’s hard to get a clear picture of where you are with your cash flow. It’s no good doing lots of work if you’re not keeping on top of the invoicing. A good approach is to bill as soon as the work is done and get the invoices out. It’s easy to get too busy or be too polite to chase up outstanding invoices. Late payments can be fatal for your cash flow. And by keeping track of sales and income monthly and monitoring patterns you can try and head off a drop in cash flow caused by slow sales by rethinking your marketing to boost income.’
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