What a night it was. Staggering losses on stock markets around the world. And Iceland has frozen bank trading. Who knows what might have happened if the bailout was rejected!
It’s easy to sit back and think that the impact in Australia will be minimal. After all, our 4 major banks are in the top 20 in the world. That’s pretty impressive. Our system is well regulated and Australian financial institutions did not engage in some of the wreckless lending practices as those in the US.
But, this is not the time for that sort of thinking. The impact will come and it will affect many businesses.
Cash is now more important than ever to get businesses through the tough times ahead. Here’s what you should be thinking about:
- get a few sources of ready cash right now. Before you really need it. Look at increasing your overdraft, get increased limits on your credit card, make friends with a few bankers
- check your debtor days. If your customers are taking longer to pay then that is a bad sign right now. They hold your cash. You are not their banker. Tighten up your debtor controls.
- manage your cash out as well. Look at every conceivable way to retain cash as long as possible.
- check your cash flow weekly. And I don’t mean looking at your bank balance. Work out a simple spreadsheet where you track your debtors and creditors for the next few weeks. Keep it simple. It doesn’t need to be perfect. But you will have a better idea of your cash a few weeks to a month into the future. Update these figures every week. It will take just a short time.
Lack of cash is going to slow growth and/or send a lot of companies broke over the next 12 months. Make sure you do everything you can to so that it doesn’t happen to you.
Cheers.
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