Cash is the lifeblood of any business – once the cash dries up, problems quickly begin to multiply. Keep the cash running freely and you can continue to grow your business.
Here are five tips for improving your cashflow:
- Have a system to manage your debtors– Come up with a clear, step-by-step way to handle outstanding accounts. It might include:
- automated reminders on unpaid emails
- a phone call or email when the amount has been outstanding for a certain period of time
- a stop credit on the client when they exceed an acceptable payment time.
- Be prepared for tax time– One of the fastest ways to run out of cash is to find yourself short at tax time. We can help with this – together we can come up with a system to help you put enough aside each month so you’re never caught short. You can also use tax pooling or other options to smooth out your cashflow.
- Try not to dip into business funds for personal spending– It’s always tempting to tap your business account for personal spending. Instead, try to keep them separate. If you’ve oversaved at the end of the tax year, you can draw down a nice bonus – that’s much better than being caught short.
- Sell old stock– Too much stock? Consider old stock, old furniture, machinery or even stationery: they can all be sold to free up space and provide a small cash injection.
- Forecast your cashflow– Create a cashflow forecast (we can do this with you) and that will help you monitor and measure the flow of cash in and out of the business.