‘If you’re out of cash and out of credit, you’re out of business,’ says Richard, who adds that a company’s three-month cash forecast should be generated not from its income statement but from ‘a detailed understanding of receipts and disbursements’.
Other tips from the Californian tech entrepreneur include managing receivables ‘aggressively’ to minimise the problem of late payment and keeping a close eye on suppliers which might be suffering themselves in a tough economic climate.
While Richard argues that reducing costs is key, he claims cutting advertising or marketing budgets first can be a mistake: ‘Instead of cutting these budgets, review the methods you are using. Are there more cost effective routes to market?’
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