10 ways to improve your cashflow
If you’re reading this blog, then you already know how important cash flow is. Cash flow is the mainstay of your business. Positive cash flow means you can successfully run and grow your business, and negative cash flow — well, that needs addressing.
Send Invoices Right Away
Sales invoices are the lifeblood of a small business. The quicker you send invoices out, the faster the cash comes in. If your current invoicing process is tedious, consider switching to a cloud-based accounting app with attractive, easy to create invoices. Also look at whether you have reviewed your invoicing process since you started the business, often this review gets overlooked.
Get Customers to Pay Invoices on Time
We know this is easier said than done, but simply sending out reminders and giving your customers due dates is a good place to start.
You want to strike a balance between keeping your prices competitive and fair and ensuring you are paid your worth for your hard work. Make sure you are keeping up to date with your market. Whilst I don’t believe in doing the same as your competition you need to be aware of where they are at.
Expand Sales Market
Sit down with some coffee and consider new ways to expand your sales market. This can be anything from offering a new product/service to implementing a new marketing strategy. If you’re not sure how, then speak to someone who does.
Monitor Operating expenses
Carefully consider your current expenses. Cut out any that are unnecessary and try to minimise the necessary expenses as much as you can.
Pay suppliers at the right time
If your suppliers offer a discount for paying early, be sure to pay in the required time to save some money. If the supplier doesn’t offer a discount, pay when it’s most favourable for your business and by the due date.
Open A Business Savings Account
This is a simple way to generate a bit of extra cash, and it is a smart way to ensure you always have a cash flow cushion for your business.
Ensure you submit all your tax returns on time
Avoid receiving any fines from the government because you let time get away from you, get all of your bookkeeping sorted a head of time. If you are VAT registered, consider setting up a Direct Debit for the VAT amount to be taken automatically.
Take out a small business loan (especially now)
Although COVID-19 has had a huge impact on business, ensure you are making the most of the government loans that are on offer to you, this is crucial for making your business succeed at present and in the future. Always read the small print to check you are eligible.
Pick up a book
Reading for business can change the way you do business. ‘Profit first’ by Mike Michalowicz has changed the way I handle my accounts and I highly recommend it. Profit First is a book on budgeting, disguised as an ‘accounting hack’. It has been written for time poor entrepreneurs in a conversational and story telling tone along with plenty of analogies to keep it interesting and easy to follow which you don’t usually get from accounting and finance based books.