MANILA, Philippines – If you’re looking at taking your business to the next level, a sales and marketing expert said you should set stricter targets and budget allocations to keep your profit.
Bong Macasaet, partner and chief distribution strategist at Mansmith and Fielders Inc., said managing cash flow means setting strict deadlines for accounts receivables—or the amount of days which will take your customer to pay—and merchandise inventory—or the amount of days in which your product will stay in your inventory.
“I have a target for my inventory level of 30 days, meaning within 30 days I should get rid of my inventory and I have a target for my accounts receivables, meaning within 30 days I should be able to collect what I have sold,” he said on ANC’s “Shop Talk”.
He said maintaining a good relationship with suppliers will also help a healthy cash flow because it allows you to negotiate.
“Don’t forget that you have to manage your suppliers also. The more you are able to defer your payment to the suppliers, you’ll have more cash for your inventory and receivables,” he said.
Macasaet added that streamlining operations will also help in cutting costs and improving profit margin.
One way to do this is to outsource processes and cutting down on unnecessary expenses.
He noted that operational costs should not be sacrificed for the expansion of the business.
Macasaet also said that to avoid any risks, it is key to allocate a percentage of the profit and set it aside for expansion purposes.
“The pitfall of many businesses is that, yes, they have profit, but they don’t know what to do with it. They end up not allocating the resources effectively and they discover later that they don’t have the profit anymore,” he said.