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Is Cash Still King In Business?

August 29 2014 l ndbs  

The old adage that Cash Is King still has meaning in today’s business world.  Employees are paid through cash, Service providers need to be paid cash, creditors are paid cash.  Any company that has its cash withheld by its debtors such company may struggle to meet its financial obligations. 

It is  obligatory for a company to make sure there are funds available for smooth operations and any continuance in giving out credit without proper monitoring can lead to collapse which may trigger bankruptcy.  However, not all clients can have cash at their disposal to pay for the product, in such cases the measures must be in place to monitor the issuing of credit through:

Keeping debtors on check

You can issue credit to clients with hope that they will pay at later stage but that should not be done in excess as it will affect cash flow whereby the stock will be in the hands of the debtors with no stock on shelf for cash buyers.  When issuing credit, it should not exceed 30% of your total revenue to be on the safe side.  In simple terms, if you have stock worth R1m, your debtors should not be sitting with over R300k. 

Keep records of all the debtors and the stock issued

Many entrepreneurs are careless when it comes to keeping records.  I once visited a Medical Practitioner who was my client while I was his patient and asked me to check his company as he suspects that the staff are stealing money and medical aids are not paying him hence he is experiencing financial difficulties.  Upon checking his records the first thing to look for was his debtors account.  We discovered that he is being owed R2m and the system he was using was not including the debtors and creditors but was only counting the cash that came in via the stock exit. 

I went through each file only to discover that some did not pay whole amount, some medical aid did not pay or declined and such clients needed to be followed.  After compiling the total list of debtors I got a temporary administrator whose job was to call the clients and within 30 days R300 000 was recovered.  The problem was not debtors failing to make payment but someone was not there to oversee and do proper filling.  Over two year period we managed to collect R1.2m.  It should be borne in mind that debtors are created through the issued stock or rendered service and if that money is not recovered there will be loophole and short of stock leading to closing of the business.

Do not depend much on credit

The more you buy your stock on credit the more you open hole for you to fall into, instead of now buying stock you will find yourself servicing debts.  If you owe R100k and have to pay that money back with 35% or more interest but if you had that money as cash to buy stock worth R100k you can make profit of over 35%, the difference is with the cash you can replenish the stock anytime and end up with compound profit since that 35% will make 35% of it, that way your business will grow through cash employed than servicing debts.

With cash available you will have peace of mind knowing that you can attend to any emergency in the business without running around making overdraft arrangements and borrowing money just to pay the bills.  When economic conditions get tough debtors shift focus from you and prioritise on their survival. Scale your debtors dow, that way you will be able to manage and control stock and be able to generate more cash sales than credit sales.  



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Dining With Captains 

July 31 2014 l ndbs  

Getting clients to buy your product or service takes talking and selling but to keep them takes character and respect.   The clients that you have they are also clients to others so they know all the tricks and the kind of game you play, and they can easily tell if you are trust worthy or not.  Some clients tolerate you when you lie not because they can’t change you for other providers but they see it as eye opener because they also do the same to their clients too.  No one wants a relationship with the clients that end with selling the product and nothing else until the next order.  But for you to always dine with your clients you need to take the following into consideration

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Curious Case Of Middle Class

June 24 2014 l ndbs  

The economy is structured in such a way that there must be employers and the employees. And it is the responsibility of employer to pay the employee for the services rendered or work done.  It is within  this circle where the  bourgeoisie have  found a dwelling place.  They also face a challenge whereby being in the middle means they must be paid salary to feed someone else or take care of house hold.  They are also a target of crime as they are the ones who are driving around with affordable cars and that lead them to seek security in the high walled estates.  

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Act Like Antrepreneur, live  like Entrepreneur

May 19 2014 l ndbs  

Ants are interesting insects and unlike lions that you have to find in the zoo, they are found in rural and urban areas.  They travel without boundaries and  work hard for their food no wonder they got special mention in the bible, Proverbs 6:5-6 ““Go to the ant, you sluggard! Consider her ways and be wise” .  In studying their lifestyle one discovered that there is much to learn from such a tiny creature than could learn from a lion.

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Advertising On Social Media For Results

April 28 2014 l ndbs  

Social media is a great platform for networking, business connection, family contact, friendship, dating that may lead to marriage or heartbreak, whatever the reason may be, the bottom line is any person who is on social media already know the purpose and intentions of being there.  How you behave to those you are connected with may make or break your business as you

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