Cash flow management should be a priority for leadership teams: Mel Hird

Improving cash flow is crucial for a company’s financial health and sustainability. Focusing on key areas of the business will aid the company’s future and make it more investable.

It’s essential to ensure that your company has efficient and effective invoicing and collections processes in place.

Monitor accounts receivable ageing reports to identify overdue payments and take prompt action to collect outstanding debts.

Also, consider offering discounts for early payments to incentivise customers to pay quickly.

Review and analyse all operating expenses to identify areas where costs can be reduced without negatively impacting core operations.

Quickly implement cost-cutting measures such as renegotiating contracts, optimising inventory management, and eliminating unnecessary expenditures.

While these can often prove unpopular, the health of the company is more important in the long term.

Carefully manage inventory levels to avoid overstocking, which ties up capital, or understocking, which can lead to lost sales. Extend supplier payment terms when possible while maintaining strong vendor relationships.

Optimise the management of cash and short-term investments to maximise returns.