Welcome to Kilimanjaro’s new monthly newsletter. Going forward we shall offer you regular commentary on key business and software matters, and show you how your business management and accounting system can really help you grow your business. We hope that the information contained will empower you to continue to make sound and rewarding business decisions now and into the future.

We want to give you a regular source of quality information. Each newsletter will contain a relevant ‘In the know’ article on key business issues, some ‘Sherpa’s Secrets’ detailing user tips for your business management and accounting software, and any current news and 'Peak Promotions' from Kilimanjaro. Likewise useful links to other key information sources shall be included for your ease and benefit.

This and all future newsletters shall be archived on our website under newsletter archive.

Future Proofing Your Business With Better Cash-flow Management

Surviving these challenging times is all about cash flow. Cash is the "life blood" that keeps a business operating and, put simply, if cash dries up, then the business fails.

Failure to properly plan cash flow is one of the leading causes of small business failures. Ninety percent of business failures are the result of poor cash flow and, according to Dun and Bradstreet, firms are now waiting an average of 55.8 days to receive payment. This means that companies are being denied access to their own funds for almost four weeks longer than the standard term.

Many companies that survived the Global Financial Crisis have three things in common: strong cash flow, low debt and strategic risk management.

More importantly – many companies with strong cash management actually grew in the tough financial climate we have just experienced. Companies with good cash flow and low debt are more likely to gain loans from banks and credit providers. This, in turn, allows them to pursue new market opportunities, ride out a drop in sales revenue and acquire new customers from weaker competitors.

A common mistake made by business owners make is to lose touch with the flow of capital going in and coming out of their companies. As a result, they fail to foresee and thus respond to a temporary cash shortage. So how does a business ensure it maintains a strong cash flow at all times? 

How to successfully manage credit risk:

Managers should regularly review customers’ credit ratings. Check for changes such as increased levels of debt collection activity or legal action against your debtor. Regular credit checks provide an overview of the financial health of existing and prospective customers. Credit checks also help managers make an informed decision about the extension of credit, particularly for clients placing large orders.

Remember - bad payers reduce business cash flow, draining the funds required for the day-to-day running of operations.

How to manage debtors and increase cash flow at the same time: 

It is crucial to have a strong accounts receivable process. This means having the appropriate terms and conditions approved and signed by customers from the outset.

(1) Set the rules early and stick to them: Customers will often have their own credit policies, such as paying after 45 days. If it is your policy to only extend credit for 30 days you need to decide whether you want to play by your customer's rules or pass on the business.

Establish the terms on which you will offer credit and then reinforce these by adding binding terms and conditions to your quotes and invoices. When dealing with new customers, ask for credit references, or carry out credit checks.

If you invoice and accept payment for goods and services after they have been provided, establish your credit terms with the customer and make sure that they agree to them.

You also need to assess the cashflow impact of offering credit, and understand how the cost of offering credit affects your business's overall profitability.

Get a signed contract so there is no confusion. Legally binding terms and conditions may include collection terms for late payment (including interest and default charges), as well as provisions for recovering any late payments.

(2) Make it easy for customers to pay: Invoices that are easy to pay get paid faster. Offering your customers access to a range of payment options such as BPAY, credit card and direct debit by phone and internet can be accessed 24 hours a day, seven days a week making it easier for bills to be paid.

And provide invoices on time. It’s courteous and good business.

(3) Monitor your accounts receivables on an ongoing basis: Having a solid process in place to track accounts receivable is vital. This includes monitoring invoices as they head towards the end of the standard 30 day payment term. A polite reminder should be mad immediately after the 30 day term and then ramp up the pressure as the delays increase.

(4) Stop credit extension on overdue accounts: Although it is tough to do, particularly if you deal with big business, you must stop extending credit to customers with overdue accounts. If you've done the work or supplied the goods, you're entitled to be paid according to your payment terms and conditions

Customise Your Screens

If you would like to customise your screens and the way they appear on OPENING >> Example: Invoice Seach:

Simply adjust the screen to the size of your choice, move it to where on the page you would like it to open (example: Bottom left).

Simply right click on the border, Select Form Position, Select Save.
 

Breakfast Seminar Invitation

Kilimanjaro warmly invites you to attend the first of our ‘new look’ Breakfast Seminars. We hope to deliver a number of seminars each offering you valuable business and software insights.

Our first seminar will be held on Wednesday 28 July where our speaker, Lyle Holm of CAD Partners shall speak to us about “How to increase profits & cash flow in your business”.

As a Management Consultant and CAD Partner, Lyle provides strategic business advisory and CFO On-Call services to a diverse range of businesses that are genuine about developing a profitable and sustainable business with high levels of financial and personal outcomes. Lyle is a Fellow Member of CPA Australia, Member of the Australian Institute of Company Directors and holds a Public Practice Certificate with CPA Australia. The core business of Lyle’s consultancy, CAD Partners is to drive growth in profit and cash flow through a combination of experienced CFO and strategic business advisory services where accurate financial records and analysis of business performance together with broader operational analysis allows the development and implementation efficient organisation wide processes.

In his corporate roles Lyle has achieved outstanding success in driving company growth in revenues, cash flow and profit and now consults to companies of all sizes wishing to improve their financial performance. With his wealth of knowledge we are truly honoured to introduce Lyle as our first guest speaker and hope you too can gain some real benefit. 

We believe these seminars will be particularly helpful to CEO’s, CFO's & Financial Controllers, however we urge anyone interested to attend.

When: 28 July 2010, 8:00 am to 9:00 am
Where: Head Office, North Sydney

To book a place on our next seminar please contact us today, light refreshments will be served.