14 Ways To Keep On Top Of Your Business Cashflow
As an indicator of a business’s financial health, cash flow is crucial for small businesses. It is a crucial sign of a business’s capacity to produce revenue and profit. It’s important to manage your business’s cash flow because the upcoming year may be challenging for small businesses. Here are 14 ideas to get you started:
- Have a clear understanding of your business cashflow – This might seem like an obvious one, but it’s important to have a clear understanding of your business cashflow. This will help you identify any potential issues early on and take steps to avoid them.
- Make sure you have a robust accounting system in place – A good accounting system will help you keep track of your income and expenditure, so you can see exactly where your money is going. This will give you a better understanding of your cashflow and help you to make more informed decisions about how to manage it.
- Stay on top of your invoicing – Make sure you invoice your customers promptly and chase any late payments. This will help to ensure that you have a steady stream of income coming in, which will in turn improve your cashflow.
- Manage your stock levels carefully – Too much stock can tie up a lot of cash, so it’s important to manage your levels carefully. Only order stock when you need it and sell off any surplus stock quickly to free up cash.
- Keep a close eye on your expenses – Make sure you are only spending money on things that are essential for your business. Try to cut costs where you can, without compromising on the quality of your product or service.
- Make use of technology – There are a number of ways that technology can help you to improve your cashflow. For example, you can use online invoicing and payment systems to speed up the payment process.
- Offer discounts for early payment – You can encourage your customers to pay their invoices promptly by offering them a discount for doing so. This will help to improve your cashflow by bringing in money sooner.
- Review your pricing – Make sure your prices are set at a level that will cover your costs and allow you to make a profit. If your prices are too low, you may find it difficult to improve your cashflow.
- Offer payment terms – If you offer your customers payment terms, you can improve your cashflow by delaying payments. However, you need to make sure you can afford to do this without putting your business at risk.
- Use credit wisely – Be careful about using credit to finance your business. It can help to improve your cashflow in the short term, but you will need to be able to repay any money you borrow.
- Have a contingency fund – It’s important to have a contingency fund to cover any unexpected expenses. This will help to prevent any cashflow problems if something unexpected comes up.
- Manage your debtors carefully – Make sure you keep on top of your debtors and chase any late payments. This will help to improve your cashflow and reduce the risk of bad debts.
- Use factoring or Invoice Discounting – If you are struggling to improve your cashflow, you could consider using factoring or invoice discounting. This will give you a lump sum of cash upfront, which can help to ease any short-term cashflow problems.
- Seek professional advice – If you are struggling to improve your cashflow, it’s important to seek professional advice. A qualified accountant or business advisor will be able to help you to understand your options and make the best decisions for your business.