How to cope in a tough economy 5 financial management essentials for small businesses

Statistics and anecdotes seem rather negative, pessimistic contemporary history and the current economic environment to say. Many small and medium enterprises in developed economies consumers retrenching, financing, difficult or painful, expensive, customers will be increased more slowly to settle scores, costs and opportunities for growth and far between rare. Companies use different tactics to cope with and survive: the reduction of costs, where possible, owners are working longer and harder, pushing for new sales and repeat sales, management, experimentation with social media, new marketing techniques. Experts provide comprehensive strategies and practical advice: product placement, pricing, diversification, creative financing, more advertising, partnerships with suppliers and customers are all as protection or as a reaction to downturn.Indeed, difficult situation requires creative and intelligent responses recommended. But for many companies, "decrease isolation" should start from the beginning: to get their financial management in connection with the most control. For small and medium enterprises vulnerable to difficult economic conditions than large companies due to their lower cash reserves and a smaller asset base, small and medium enterprises in managing their finances, their cash and working capital of laser focus. Without it, none of the customers, marketing and product diversification strategy and tips work.1. Knowing how much money you have available - only cash is crucial for small businesses in both good times and bad times. Even if you think you have sufficient financial reserves at a certain time, in an uncertain environment, you need to know exactly how much money you have available at any time. Surprisingly, almost 10% of Australian small and medium-sized enterprises in 2010, CPA Small Business survey included never reconcile their bank accounts. This figure - which held steady over the years the survey - among the highest in Asia and the Pacific region.2. The project, how much money you can expect - and often continuouslyKnowing cash today will not help tomorrow or next month. In uncertain times, prospective plans and forecasts are critical to your company in a position to anticipate and respond to any deficiencies. Nearly 40% of Australian small businesses from the CPA survey never prepare cash flow forecasts for their businesses. Another 30% can be done, but even on a quarterly basis. At the same time will be at least 40% of companies from other countries in the region such as Hong Kong, Singapore or Malaysia, plans, cash flow on a monthly basis, with many of them as often as twice month.3. Keep your finances up-to-date and your relevantAs indicators is important, because the money is there is only one piece of the puzzle that make up the image of the company, what are her chances and risks, where it lies. Nowadays it is difficult to assess and properly manage the financial situation of an average family of "intuitive", no financial records. An understanding of sales, cost trends and patterns of even the simplest transactions require adequate and structured information. It may sound like a cliché, but it is actually true: you can only manage what you can measure. Regular reports and a few - and more for larger, more complex operations - consistent and carefully selected indicators and metrics are maps and compass, which you can control your business. More than 10% of Australian small and medium-sized businesses never meet qualification and 67% of them have no financial relationships in business decisions and trying to put together and how the metrics are rare, less than once per quarter.4. Find out who you owe: how much and how long they get to primary sources of cash payThe customers: whether and when to pay. Numerous studies, reports and business stories show - growing - challenges for it. There is no miracle to pay for the production of customer: the company needs to know is who is guilty, how much and for how long, and monitor and require payment. It may be easier and smarter tools to create Ad-Hock more scientific strategy, but it is necessary that information on the administration of claims and a willingness to pay. 51% of small and medium-sized Australian never prepare a report old borrower and 40% of them after a maximum delay customers every quarter with 20% of all small businesses have never been to try to find out from delinquent clients. Waiver of defaulters in an environment where companies, large and small, try to payment, the furthest stretch of hazardous best.5 enjoyment. Get the most out of your inventory inventoryManaging that a sufficient quantity of goods for sales promotion are also minimize excess inventory, is a difficult task. In many industries, engulfed the money supply at an alarming rate. If the customer is willing or able to spend hard sell, stocks quickly accumulates in the waste of money. Companies whose products or a short life cycle inventory can be significant costs to adapt quickly and active participation in a weakening market environment. Throughout the Asia-Pacific region more than 20% of small businesses aim to work to reduce their excess inventory, while less than 15% of Australian companies to focus on these efforts.Jeopardizing their survival, or give up cash flow and profitabilityIn worst, it is not implemented and the basic financial management requirements, the risk to the survival of your company: It is similar to management blindfolded and without insurance on auto-pilot on a busy street in the crazy traffic. Even if your business seems to be only good, and you are confident in the future, it runs without adequate assessment of their operations, assets and creditors are guaranteed to cost you money so real and potential opportunities. You can not bankrupt the country, but no jackpot ultimate commercial success without a sound cash flow management practices.