If you are a business owner you know the importance of strong cash flow, it is crucial for a small business’ survival. It is the difference between being able to plan your growth or endless worry and anxiety. If you are just starting out or not ready to employ a full time Financial Controller you need to consider what are the right options to manage your money coming in and going out of your company. Here are a few tips:
- Forecast your cash flow
You need to predict ups and downs in advance. Start by making a list of payments you’ll need to make over the next month, quarter and yearly. Then, make a list of all the money that should be coming in. Finally, subtract the payables from the receivables to come up with a general idea of how much cash you’ll have at any given time. Now you have the basis of your cash flow forecast. There are plenty of excellent Forecasting and Planning software products available for small to enterprise size businesses – why not invest now in your future Forecasting, it will be money well invested.
- Lower your expenses
Take a long hard look at all your expenses, limit your expenses for improved cash flow. Of course, this is often easier said than done. Look through your company’s budget and see what can be slashed or reduced. You might even be able to bundle certain services — like internet and phone — to reduce bills and save much-needed cash.
- Get paid on time
An order is not complete until the goods or services are paid for. When you sign up a new customer, discuss and agree with them what your credit terms are and put everything in writing. Rather than just saying “payable in 30 days”, be specific, include a date when payment is to be paid by: “due on 30th November”. Offer a discount for early payment as an incentive, the cash in your bank instead of your customers is your priority. If there are any queries regarding your invoice resolve them immediately and stick to your original payment date.
Use Invoice Discounting to release funds early
If your cash flow is suffering due to late-paying clients or you are a start-up and having problems securing finance from your bank why not avail of an Invoice Discounting facility where your cash will be released almost immediately without the need for a loan or overdraft facility and no long decision delays.
At Oxmantown Commercial we specialise in working with SME business owners and start-ups providing cash flow solutions –