Interest rate repayments hurting your business profit?
Tight cashflow putting the business brakes on?
Why are some businesses thriving while others are experiencing challenges?
A business success key includes using the "right strategy", and "right measurement tests" for rising interest rates.
A number of business owners and managers I spoke with over the last month are moving to enhance their business and expand their operations. Are you one of these?
Let’s see if you are taking the same steps, the checklist is below.
IT company cashflow management ideas,
- Paypal merchant facility for internet payments. Account setup costs nothing, giving the younger generation a payment choice and you receive payment immediately.
- At least having online merchant facility, provides immediate funds. Consider this instead of your business providing credit.
- Payment due upon delivery of material.
- Deposit paid at the time of purchaseorder or before commencement of work.
- Projects paid on milestones being achieved, "Progressive Payments" (as opposed to payment at the conclusion)
- Check your Accounts Receivable (AR) reducing the payment terms to minimum possible.
- Incentive for early AR payments (example a % discount)
- Late payment penalties (Check your terms and conditions of sale, it may need updating)
Strategic health measurements
Three key performance indicators for your business include
- Debt (loans) to asset (equity) ratio (amount of debt). Lower the better, example 60% in this climate.
- Repayment serviceability (Payments from cashflow)
- Project a 2 % interest rate fluctuation and its impact to your business profitability.
One year business strategic focus
- Focus on revenue producing activities (as opposed to backoffice processing or new product development)
- Focus your business leveraging a mentor. How do you select the right one for your business? Here is a video explaining the criteria to check.
- Outsourcing or “out tasking” non “core business” activities, options include
- Bookkeeping / accounting
- IT and computer support services
- Virtual Assistant / Receptionist services http://nearshore.greymouse.com.au/Solutions/virtual-receptionist
- Right skilled person doing the right work (measure the income productivity)
- HR recruitment – Example No Borders service (http://www.noborders-group.com)
- Occupational Health & Safety compliance
Compliance adjustments
If you have money loaned to or from the business, consider the adjustments necessary before the end of this financial year.
- Money loaned to the business needs compliance, with capital and interest rates identified.
- Interest rates need to be at market rate.
If you do NOT have a loan_agreement, click here to see the agreement templates.
Your business can also thrive in this changing interest rate business environment.
Regards,
Kelvin Davis
