Using the business advisory services of a company like UHY FDW will ensure a realistic plan of action is devised and implemented to get the best results for your business.
5 Cash Flow Management Mistakes Your Business Can’t Afford to Make
No matter how expensive the software you have to monitor and analyse your business’ finances, you are putting your business at a huge risk if you don’t calculate your cash flow properly
Here are the top 5 cash flow management mistakes online shopping owners make:
You’re Not Negotiating Rates with Banks and Credit Card Companies
Beyond the basics, there are a few hidden financial expenses that always make a huge difference.
It’s important to take into account any interest you may be collecting on loans that you used to start your online shop.
For a business with 10% margins, there is a huge difference in between 5% loans and 6% loans.
You should always try to lower your interest rate and if needed, refinance your loan.
Payment: If your customers pay you using credit cards or PayPal, you have to make sure these costs are included.
Always try and negotiate with banks and credit card companies, they don’t want to lose you!
You’re Not Looking at Rent Alternatives
If you are an SME with rented office space, you always need to include all of your fixed costs.
Look at rent options extremely carefully.
For example, if you rent offices or storage facilities in an area where rents tend to be particularly high, have a look at getting an office on the edge of town to save money, taking into account all of the costs this would entail, like the cost of moving or the cost of a longer commute.
You’re Not Paying Attention to Exchange Rates
If you buy your inventory in a foreign currency, you need to be aware of how exchange rates impact your cash flow forecast.
It may seem like a small difference, but these additional costs can really add up.
You’re Not Taking Refunds Into Account
You absolutely must take all refunds into account when undertaking cash flow management.
The best way to do this is to take refunds from one year, and deduct from the next years expected revenue.
Other questions to ask : Can the goods be resold, or have you lost a piece of inventory because of the return?
You’re Not Calculating Both an Optimistic and a Pessimistic Outlook
When building your cash flow forecast for next month or year, try out the best and worse case scenarios and make sure you are covered for both.
Make sure you have what you need to continue and allow for unforeseen circumstances to make sure you are appropriately covered.
Conclusion
When you have a full, detailed cash flow analysis, you can use it to make the right decisions about pricing, inventory, loans and more.
Just like anything in eCommerce, with cash flow, it’s often the tiny changes that can have the biggest results.
This post was written by Yotpo‘s CFO, Rotem Landa. It originally appeared on the Yotpo blog.
UHY FDW have been serving businesses for 25 years through our experienced advisers, helping you pinpoint issues your business may be facing, providing solutions and identifying opportunities for your business to grow and save money. Contact us Today.