For many small business owners, maintaining a steady cash flow can be one of the most challenging areas of running a successful operation. Keeping on top of finances will help ensure that your company has spare cash over and above its expenses at all times. Yet, despite this simple fact, many entrepreneurs struggle to find the right balance in their businesses.
Managing cash flow takes work, but there are some handy tips which will help keep you on the right track. Here we explore some of the best:
1. Set targets
Preparing a cash flow forecast is a great way to draw attention to the necessity of keeping on top of credit control. This is not a one-time fix, however. Your forecast should be regularly updated – once per week is fine – in order to be able accurately predict what the outlook for your company will be in the coming six to 12 months.
2. Make your payment terms clear and concise
Setting up clear payment terms from the start is vital to your business and its cash flow. Without having any in place, how are you going to know when you are going to get paid?
3. Send out invoices promptly
Sometimes, the company can create cash flow problems themselves. Failing to send out invoices quickly is only going to add to the length of time that it takes to receive your money, so invoicing upon completion is essential if you want to shorten the time that it takes for their payment to hit your bank account.
4. Make payments easy to make
These days there really is no reason to make things difficult for your customers when it comes to accepting payment. Faster payments via BACS are now available from the vast majority of high street banks, and they’re easy to set up too. Try to dissuade customers from paying by cheque wherever possible, as the extended timeframe involved will do nothing to improve your cash flow situation.
5. Offer different package deals to customers
Giving your customers the option of taking up a fixed rate package deal can be a fantastic way to forecast just how much cash will be coming in over a set period of time. Setting up retainer packages will give you more of an idea of how things look month on month and it will also give you the opportunity to bill up front rather than in arrears.
6. Mind the gap
Minimising the amount of time between the day that you invoice and the day that you get paid can help improve your business’s cash flow considerably. Try setting up direct debit payments with customers who pay a set fee each month in order to bring those debtor days down.
7. Use the cloud
Making use of the very latest technology can also speed things up for your company. Things such as cloud-based accounting have revolutionised many businesses, allowing them to view their accounts from anywhere at any time. Many services offer 24/7 accountancy advice as part of their packages too, which can be extremely useful when you need an answer to a problem outside of office hours.
8. Forget profit
Far too many businesses, especially startups, concentrate on profit without giving cash flow a second thought. Naturally, you will want to be profitable eventually, but your priority in the early days is simply surviving – good cash flow will ensure that you do.
9. Delegate and train
Appoint one of your trusted members of staff to be in charge of your company’s cash flow. By putting one person in charge of all money coming in and going out you will make sure that your cash flow remains in good shape at all times. A single person will always have a better handle on how the business is performing than a group of people ever will.
10. Encourage repeat business
New customers are great, but old customers are better. Finding ways to make your existing clients keep coming back for more will always ensure that you have money moving through your business.
11. Make use of finance
Finding your way through the early days of a new venture can be tough, so make use of any help that you can get. Obtaining business finance can be a great way to keep your purchasing power up, helping you grow your company into the successful enterprise that you know it can become. You can get a quote for a business cash advance 365 Business Finance using our quick quote form here.