As a small business owner, the flow of cash to and from your business is of vital importance. In simple terms, if you can’t manage your cash flow properly, your business will not last beyond the next year. It’s critical to survival, growth, and investment – so here are some smart tips to make sure your cash flow keeps your finances healthy.
Hire an accountant
We cannot stress enough how the impact of proper accounts & tax advice will bring to your business. If your small business finances are in disarray, this should be your first step. An accountant will be able to piece together where things are working, and where they are not. They will also be able to look at your overall business and tell you where you can save money – and where you are wasting it. Most importantly, is that a regular meeting with an accountant will help you see future cash flow issues at a much earlier stage. It will give you the time you need to iron out any problems and stop your business from losing out in a big way.
Budget, budget, budget
There are far too many small business owners out there who don’t plan properly. Again, this is an area where an accountant can help you. It is critical to budget so that you safeguard your business. You will need to look at a broad range of factors, from sales cycles to overall industry growth. Good budgets will plan for the future and help you get through the worst financial woes.
Again, this is an area that few small business owners do well enough. Tracking and monitoring your cash flow against your budget is the only way to see how you are doing. Let’s say at the end of the month you realise you have taken less than anticipated. Not only can you adjust your budget to allow for the drop in income, but you can also identify why you have made a shortfall. Doing this will enable you to make the necessary changes to your budget – or your business plan whichever gives you the best results.
Pay when due
When you pay for supplies, make sure you always pay on the due date – not before, and not after. It ensures that the cash in your bank is earning interest right up to the deadline. And, of course, that you won’t face any late payment charges. Don’t underestimate how quickly you will irritate suppliers with late fees. Do it often enough, and you will find yourself looking for other options.
The same applies to billing your customers. Let’s say you are offering credit to your clients. Every time you do this, you are putting an enormous strain on your finances. It’s easy for this to trickle down into other areas, too, such as your payment of staff wages. It is critical, then, to bill your client as soon as possible Don’t forget, they won’t need to pay you for 30 days, so you have to account for this, too. The faster they pay, the quicker you can get the money working for you – it’s that simple.
Good luck – we hope these tips have helped!