Sme managers are on multiple fronts and emergencies are an integral part of their daily lives. However , if there is one task they should never leave aside, it is that of monitoring their cash flow. Good cash monitoring is essential to support the development of the company. It’s not just about looking at your bank account every morning or meeting with your banker. Below are the key points. 1 – calculate your working capital requirement (wcr) working capital is a key indicator of your cash flow. Poorly controll in the growth phase, it leads to strong tensions, which can lead to the cessation of payments. Bfr, what is it? The working capital requirement (wcr) is the amount of cash required to run your business.
To Buy Your Stocks and Raw Materials
Operate your machines, remunerate your employees and pay your suppliers in waiting for payments from your customers. The working capital will cover the cash gap between the expenses essential to the operation of the company (which must be anticipated) and the arrival of receipts, subject to the vagaries of payment deadlines. Therefore, to calculate your bfr? The brf (working capital requirement) is calculated Finance And Banking Email List in parallel with the preparation of the annual budget / business plan. This budget is based on a growth forecast for the company and, from there, its need for working capital. Will the company’s growth be the same? Are you planning to launch a new product (with an increase in your purchases of raw materials).
Do You Plan to Prospect New Customer
Therefore, with later payment terms? So many questions whose answers will influence your bfr… how to reduce your bfr? To reduce your wcr, one of the levers of action consists in reducing your customer outstandings: first try to negotiate with them a payment at 30 days instead of 60 days for Asia Email List example, set up deposits with the order whenever possible. Therefore, in place a dunning procedure suitable for late payments, organize an amicable dunning campaign or call on a collection company, which will put its team of specialists to work in order to bring fresh money into your boxes. Reducing wcr also means adapt the terms of payment of its suppliers (by increasing the duration of credit through targeted actions).
