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March financial improvement tasks

Regularly check the health of your business to help you to cut costs and improve profits.

On this page

  • Review supplier terms
  • Review your stock
  • Set up customer credit controls

Tasks for March focus on supplier terms, stock and customer credit to ensure you're getting the best results for cash flow.

Review all supplier terms

Paying suppliers impacts your cash flow. You can free up cash flow by negotiating extended payment terms.

If you make full use of your terms of trade with your suppliers wait the 30 days allowed to pay after delivery, it's effectively an interest-free loan.

How to do it

  • review all terms offered by your suppliers
  • make a list of suppliers who require payment in less than 30 days
  • approach each of these suppliers and negotiate payment terms longer than currently offered
  • look for new suppliers that provide extended payment terms.
Check whether:
  • your business's financial policies and procedures are clear about how to choose and manage suppliers. The Accounting and financial policies and procedures template includes sections that are a good starting point
  • payment terms specify that terms commence from complete delivery, as opposed to part delivery. This should include goods or services that have not been provided as agreed
  • you can extend payment terms. Lengthening the payment terms from 30 to 45 days may help to smooth out fluctuations in cash flow
  • quarterly payments are available. Some larger companies e.g. utilities, may accept quarterly payments, which can help in forecasting cash flow requirements
  • there is an alternative supplier that can provide better terms, first discuss this with your existing supplier. They may be able to match the offer and will appreciate the loyalty you have shown.

Financial policy and procedure manual template (DOC 191.5 KB)DOC icon 

Review all stock held

Make sure you are not tying cash up by holding unnecessary stock. It costs between 10%-30% of the value of stock just to maintain it. The costs come from storage, insurance, keeping accurate tracking records and proper controls to avoid theft.

How to do it

  • list all stock held and the value of stock on hand
  • review sales of each stock item to identify fast moving and highest-selling stock
  • list slow-moving, aged and excess stock
  • update stock records and make a buying policy.

You can manage your stock by:

  • understanding your stock. Which items move quickly? Which items contribute the highest gross margin? Which ones are seasonal? This will help you know how much of each line of stock to keep on hand and when reorder is required
  • selling aged and excess stock at prices to move it or use as a donation (don't forget to advertise that you made the donation). This will generate cash to invest in new stock that will move quickly and free up display space
  • negotiating with suppliers for delivery of fast moving stock when required (called Just In Time). This eliminates the need to hold a large store of stock to meet customer demand
  • maintaining good records and control over your stock holdings to ensure you keep aged and excess stocks to a minimum and reduces the risk of theft. It also makes sure you have adequate stock to meet customer needs.

Set up customer credit controls

Having good customer credit controls in place will increase your chances of getting paid on time.

How to do it

  • record the results of customer credit checks.
  • rank all customers according to credit risk.
  • set credit limits for each customer.

To better manage customer credit:

  • engage a specialist company such as VEDA or Dun & Bradstreet to assist in checking the credit history of a potential customer
  • make sure your system tracks outstanding credit of your customers and notifies relevant staff if the limit has been exceeded. Ensure this notification happens before the next sale
  • document procedures to be undertaken when a credit limit is exceeded and ensure all relevant staff are aware of what needs to be done.

Want a financial reminder in April?

Sign up for the Small Business Victoria update to receive fortnightly tips, trends and tasks. It will include our handy financial improvement tasks for April.