5 super easy tips for staying on top of your business’ cash flow9th April 2018
For your business to grow and push towards a brighter tomorrow, maintaining a healthy cash flow is vital. It is the lifeblood of any business and without it, your ability to function and compete each day will diminish. Although cash flow generally tends to fluctuate, if it drops for a sustained period, or your expenses have risen beyond what it can handle, this could spell trouble. However, you can turn things around. If you’re worried about your business’ Cash Flow and want to do something about it, here are 5 super easy tips to help.
1. Set a budget for your business
Setting up a budget for your business is an important step towards regaining control of your cash flow. You should try to plan ahead wherever possible, generating a forecast and taking into account spending and earning potential whilst also assessing whether there are any projects you want to begin work on. This may help you maintain a reliable balance between your business costs and revenue, set targets and inform you of whether you’re heading towards either positive or negative cash flow. By being prepared and armed with all the relevant information, you’ll be in a stronger position to act early and find an appropriate solution.
2. Keep up-to-date records
In order to run and maintain a successful budget, you’re going to need the records to back it up. This should include everything: income, money that you’re owed, money that you owe, regular expenses, inventory, profits and any available cash. If your records aren’t complete or being constantly updated, your business could still be spending more money than it can afford without realising it. Only by being clear about what your business is earning and spending can you set worthwhile targets.
3. Track your business’ spending
Avoiding any necessary expenses is vital in maintaining a healthy cash flow. This is why you must regularly inspect your business’ spending. Some of the common areas in which your business could incurring unnecessary expenses include energy usage, paper consumption, travel, IT and equipment.
- Energy usage: Are you having to turn up the heating because your premises aren’t energy efficient? Are your employees leaving their computers on standby when they go home? Although these costs may seem trivial at first, over time they add up and amount to a large quantity of cash being wasted, which could have been better spent elsewhere.
- Paper consumption: Encourage your employees to think twice before hitting the ‘print’ button. Do they really need to print out that email or document? Can they just read it on their digital devices instead? Why not halve your paper consumption by simply using double-sided printing when necessary? Simple changes to how you and your team work could generate some big savings for your business.
- Travel: If your business requires you to send some of your employees to various locations, whether national or international, you can still make some savings here too. First off, is it necessary? Rather than saying the same thing over and over, why not speak to everyone at once during a conference call? Instead of booking 1st class flights and 5-star hotels, go economy and stay in a B&B.
IT and equipment: Another area in which your business might be losing money could come as a result of out of date IT systems and ageing equipment. This can cost you in a number of ways, including lost productivity and higher energy consumption. So, if you haven’t already, install the latest software and bring in new equipment. If you need help handling the cost, there are plenty of Asset Finance solutions that can help.
4. Establish a Credit Control system
Another reason why your business may be suffering from weak cash flow could be as a direct result of weak credit control. If your customers or clients aren’t paying you on time, or at all, it’s bound to have a negative effect on your business. However, there are a number of easy-to-implement ways in which you can resolve this:
- Know who you’re dealing with: Before offering your goods and services, try to learn more about the customer in question by running credit checks. Using the information this unearths, figure out how likely they are to pay your business on time, or at all. If what you see makes for an alarming read, refuse to offer them your goods and services. Why provide if you stand little chance getting paid?
- Make sure that you’ve made your payment dates clear: If you’ve agreed to offer the customer your goods or services, make certain that you’ve made it explicitly clear when you expect them to pay you in full. Not doing so could cause them to miss the date without even realising it. If you’re selling something that carries a high purchase price, why not offer them a variety of payment plans to make it more manageable? You should also be trying sending them reminders before the payment is due, making sure that they don’t forget.
- Send invoices out on time: In order to avoid payment delays, or the customer not taking you seriously, always ensure that your invoices are sent out on time and are properly filled in. If you want to know about what you need to include in your invoices, you can read more on the subject here.
5. Staff training
Finally, your business may also be suffering from weak cash flow because of poor business practices. Keeping an eye on day-to-day operations is essential. If your staff are making mistakes or there are things which could be done better, then why not provide them with adequate training opportunities? This will make your operations faster, more efficient, cost-effective and safer. Plus, it will also raise morale and employee engagement. If you’re unable to provide the training yourself, then perhaps you might want to bring in the expertise of someone who can.
Still looking for more ways to reinforce your business’ cash flow?
Sometimes problems with your business’ cash flow can arise through no fault of your own. But, rather than pointing fingers, what matters is identifying the root cause of the issue and deciding on an appropriate response. Left to its own devices, weak cash flow will gradually escalate, resulting in more damage. However, there are plenty of ways in which you can avoid this. Thanks to the Alternative Finance Industry, you now have access to a wide range of business finance solutions that could help. All you need to do is source an agreement that suitable for what your business requires. So if you’re currently in the middle of a cashflow crisis, or are expecting issues in the near future, apply for Cashflow Finance today or find out more with Rangewell.
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