side business ideas

Document Sample
side business ideas Powered By Docstoc
					SMI Business Ideas
A Quick Guide to Cash Flow Management
By Mr. Samuel Lai, Chartered Accountant (M), CPA Australia, B Commerce, CFP


“Lily, please tell them that I am not          transferred to fixed deposits or short                      Stretch your credit terms
around this week” Mr. Vincent told             deposits that could earn higher                             with supplier
his secretary. He has been avoiding            interest.                                                   You need not pay every bill as soon
the landlord and suppliers phone                                                                           as it arrives, try to obtain a longer
calls because the shop rental and              Bill On Time and Manage                                     credit terms from suppliers that
payment for goods are overdue.                 Accounts Receivable                                         would allow you to keep the cash
Vincent’s business is doing well, but          Invoice should be issued immedi-                            now and settle the bill later.
the money does not come in as                  ately once the goods have been
quickly as the money that is going             delivered or a project is completed.                        Increase Working Capital
out of the business.                           You should also set up an accounts                          Make sure you have sufficient
                                               receivable process that allows you                          working capital to finance your
Many business owners struggle to               to record sales, payments, and                              increasing business volume. You
maintain adequate cash flow for                generate monthly statements and                             could achieve this by obtaining
their business. And inadequate cash            ageing reports. These reports will                          overdraft and trade facilities from
flow to meet a company’s financial             assist you in making informed deci-                         the bank, or from shareholders by
obligations may cause damage to                sion pertaining to credit control and                       issuing shares to them.
the company’s credit standing,                 take necessary actions immediately
higher interest expenses, diverting            on overdue accounts.
management focus from making                                                                               Use Proper Bank Facilities
business deals to negotiating settle-                                                                      It is important to choose proper
ment terms, stalling business
                                               Inventory Control                                           bank financing by considering the
                                               You should keep adequate stocks to                          financing requirements and nature
growth and may eventually cause
                                               meet the projected sales but do not                         of the project. For example taking a
the fall of the company. Cash flow
                                               keep too much stock on hand, as it                          long term loan when financing the
crunch need not be a virtual; you
                                               could tie up your cash. Stock level                         purchase of a factory; overdraft to
can improve your company’s cash
                                               should be controlled base cyclical                          cover short term cash deficit or use
flow by making some adjustments
                                               demand, anticipated sales and stock                         it as a buffer; hire purchase or lease
in your business practice today.
                                               delivery time and cost. You can also                        facilities for purchasing new
                                               adopt Just-In-Time system to lower                          machineries; and trade facility such
Cash Flow Projection                           your inventory level.                                       as Bankers Acceptance to finance
Cash inflow is the movement of                                                                             the purchase of trading goods.
money into your business such as               Plan Expansion
cash sales, collection from debtors,           Beside the business expansion plan,                         The above suggestions are only
deposits from customers, bank loan             a proper plan on cash flow is also                          basics to cash flow management.
and director’s advance. And cash               important for major expansion proj-                         We could explore further on this
outflow is the movement of money               ect such as acquisition of property                         issue by looking into areas such as
out of your business, is generally the         and expansion of production line.                           financing options, managing bank
results of paying expenses, repay-             Make sure there are sufficient cash                         facilities, investing surplus cash
ment of amount due to supplier and             to cover all the anticipated                                flow and debt management in
settlement of bank loans. By                   payments for the expansion.                                 future. Please contact us if you
projecting and monitoring the cash                                                                         require more information or assis-
inflow and outflow frequently, you                                                                         tance on cash flow management.
can determine and manage the
                                               Have a buffer (reserve) to
amount of cash that will be avail-             cover cash flow crunch
able during a designated period of             Set a side a buffer (cash reserve)
time. Any projected cash deficit               which is liquid to cover any unex-
could be dealt with immediately by             pected cash outflow such as recov-
arranging advances, overdraft facil-           ery of a production line due to fire
ity, and reschedule payments. And              and temporary slum in the industry.
any unused cash surplus could be


                       TM


                              KL (HQ) :   B-13A-6, Block B, Megan Avenue II, No. 12, Jalan Yap Kwan Seng     Puchong : Suite 15, 6th Floor, IOI Business Park,
                                          50450 Kuala Lumpur, Malaysia                                                 Bandar Puchong Jaya, 47100 Puchong,
                                          Tel : +603 2166 0717                                                         Selangor, Malaysia
                                          Fax : +603 2166 9717                                                         Tel : +603 8076 8717
                                                                                                                       Fax : +603 8076 8719

				
DOCUMENT INFO
Stats:
views:361
posted:8/6/2008
language:English
pages:1
Description: This is an example of side business ideas. This document is useful for conducting side business ideas.
Beunaventura Longjas Beunaventura Longjas
About