
Managing cash flow remains a huge challenge for many retailers and focusing on the refinement of product lines and integrated stock management systems is essential if profitability and stability are to be achieved. In order to successfully implement these changes, businesses must take a systematic and analytical approach which could involve considerable time investment. However, taking action now could pay dividends; unlocking the funds and potential required to grow.
Managing cash flow As industry commentators predict a tightening of lending criteria post-Brexit vote, reduced access to finance is likely to exacerbate cash flow difficulties. Preservation of working capital has traditionally proved difficult, with many larger retailers subjecting their suppliers to extended payment terms, while chasing late payment from debtors often proves costly and time consuming.? To ensure effective cash flow management, retailers must create clear financial forecasts which allow them to make informed decisions regarding spending and investment activity. This should involve the identification of any events or time periods when cash flow may be stretched, for example, the festive season and the time immediately following the business? quarterly VAT payments. This foresight allows businesses to react accordingly, so that they can delay non-essential expenditure and if required, seek additional finance early. In the protection of cash flow, some retailers are now learning lessons from e-commerce specialists by seeking consignment stock arrangements. Whereas traditionally, all stock was purchased in bulk at the beginning of each season, this arrangement means that goods are only bought from suppliers once they are sold, freeing up funds and increasing liquidity. Refining product offering Too many smaller retailers have fallen into the trap of trying to sell everything to everyone?? in essence adopting the “Amazon model” of commerce; stocking a variety of product lines in an attempt to optimise sales. However, this strategy carries significant risks and smaller, independent retailers are often undercut on price by lean online specialists. Read more about Amazon:- Here’s what banks could learn from the mighty Amazon
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