Thursday, July 30th, 2009
Most suppliers understand that no company can sell from an empty store. Therefore, most suppliers usually work out financing arrangements that take into account when the company gets paid by its own customers. In other words, most suppliers have come to understand that when their customers are paid, they’ll be paid shortly thereafter. Otherwise, suppliers know they’ll get the unpopular merchandise back anyway when the companies close down—and that’s the last thing suppliers want.
Success can lead to failure if you can’t master cash flow dynamics. If a company can’t keep up with the demand of its customers, it may need to scale down its expectations temporarily and hope to make the most of its growth opportunities later. If a company can’t keep up with payments to its suppliers, it should meet and negotiate, and maybe reduce its purchases in the future. Then it should establish better means of monitoring its cash flow and find ways to operate more efficiently.
Tags: cash crunch, cash dynamics, contingency, productivity
Posted in developers, finances, management, merchandise, negotiationg | Comments Off
Thursday, July 30th, 2009
No company can anticipate all contingencies with 100 percent accuracy. This is especially true for operations in start-up mode.
If the company pays cash for its inventory, it won’t be able to restock key products when it comes time. Too many businesses have backed themselves into this corner, suddenly finding themselves with all the wrong merchandise and empty spots on their shelves where their biggest sellers once were because they have run out of cash to pay for the restocking. The next thing to go will be customers and, eventually the business.
Tags: cash crunch, contingency, productivity, profit
Posted in merchandise, money spending, payments, taxes | Comments Off
Thursday, July 30th, 2009
The size, nature, and complexity of a business may indicate up to one, two, or three years of losses before the business starts turning a profit in new ventures. Managers won’t know for sure until they have some operations time behind them and have begun retool-ing based on what the market is really like, rather than on what they think it’s like. Once managers have an understanding of what customers think of their products and services, they can make more realistic predictions about expenses, income, and profitability to minimize the chances of getting into a cash crunch.
Tags: business, cash crunch, productivity, profit
Posted in customer demand, developers, finances, management | Comments Off
Thursday, July 30th, 2009
Businesses, especially new companies or old companies making forays into new enterprises, run the risk of sinking funds into the wrong end of the operation and then not having enough cash when it’s desperately needed. Adequately reserving for growth, especially during the early days of the business, is critical. It also helps to recognize the areas where cash can disappear without a trace.
No matter how prepared the business may think it is, unless it is operating in an area in which it has had years of experience—in terms of both the product and the market—the chances of anticipating the majority of risks that could come its way are remote. If managers hope for the best but reserve for the worst, they will find themselves in a better position when those cash-draining contingencies do arrive.
Tags: cash crunch, cash flow, productivity, profit, sales
Posted in accounting, banking, credit cards, financial risks | Comments Off
Thursday, July 30th, 2009
That’s good advice for any department head, no matter what the level of financial involvement. R & D managers might find need for additional research into other avenues affecting market or product, making additional expenditures necessary. Sales managers might suddenly be directed to fire several staff, incurring the cost of training and reduced productivity as part of these unanticipated changes. The product developer may find a need for more complex and expensive equipment, may see a sudden increase in the cost of raw materials, or may suddenly face new legislative restrictions on production.
If either of these individuals or companies haven’t made plans to protect their enterprises and reserve against such risks, then the demand for their product won’t really matter, because they won’t have the resources to meet that demand.
Tags: cash flow, productivity, profit, sales
Posted in accounting, customer demand, developers, payments | Comments Off