Biz Brains Systems
Biz Brains Systems
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Shrikrishna on Cost savings for cash-strapped Companies

14.11.18 05:04 PM By CA Jayant Kadge

Shrikrishna on Cost savings for cash-strapped Companies

Once Arjuna said to Shrikrishna, "I was amazed that day when you explained Nakula how a start up can save on expenses, I have one of my friend and after 5 years into business, he always faces problem of cash crunch. Do you have any suggestions for him? He will be vbery happy if you cans ave him from this problem." Shrikrishna smiled and said, "There are many methods to save costs even for a established business, i can teach him but he has to promise me one thing." Arjuna said, "What is it? he will certain do hat you want him to do as he is really concerned about his growing interest costs and follow ups from his vendors for payments". Shrikrishna said he will have to be more disciplined with his habit of incurring expenses impulsively. H will have to prepare a budget to which he will have to follow strictly from now on". Arjuna said he will do it as a promise."


Shrikrishna continued, "Cash collections have to be made faster. Nowadays there are 100s of ways a payment can be made and all these payment avenues should be made available to clients. It should be made convenient for them to pay. Sundar can think of giving discounts to speed up payments or he can think of factoring his debts with financial institutes. He should take stock of his inventory and sell of old stock at discount and generate cash from it. He can think of moving to a business center as these have shared facilities like pantries, conference rooms, photocopy machines, etc. which saves costs." 


"He can avail concessional interest rates loan from banks. He should automate debtors follow up systems with help of software and also train his employees to collect faster. He should not overstock his inventory. He should prioritize which debts to clear first, like some loans are liable for higher rate of interest like credit card debts. He will have to identify wasteful products and services which he is buying or subscribing to which he doesn't use. He should look for alternate products or services or vendors which are cheaper." 


Arjuna noted all the points and sent the email to Sundar. Sundar was very happy to learn these methods and thanked Arjuna a lot.  


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