Cashflow is vital in any business.
Small businesses even more so, if you can’t manage your cashflow effectively then you can quickly end up in a sticky situation.
You need cash coming in regularly to ensure that you can continue trading and to pay bill and staff on time.
The money in your bank can easily be effected by late customer payments or unforeseen costs causing a huge disruption.
When you scale your business there can be periods of low or negative cashflow as you invest in the business.
So – what can you do to improve the cashflow in your small business?
1 – Make sure your customers pay you!
Don’t be afraid of chasing money that is owed to you.
2 – Send your invoices on time
This follows on nicely from point 1 – if you don’t invoice timely then the customer will take longer to pay and also sometimes they have forgotten what it was for which puts them off paying quickly too.
3 – Reduce your customer payment terms
If you currently allow 30 days or more for customers to pay you then look at reducing this to 14 or 7 days so that you get the money more quickly into your bank account. Make sure you give any existing customers notice that you are making the change.
4 – Take deposits or up-front payment
If you must pay for expenses or materials in advance then ask for a deposit.
Some services you can request full payment upfront which is also a great benefit to your business.
5 – Make the most of supplier payment terms
If you are struggling or going through a cost heavy period and you have suppliers that offer 30 days to pay invoices then why not use them.
6 – Use direct debits
If you have income and expenses that can be set up on direct debits then this is beneficial for you and your cashflow planning as you know the exact date and amounts each month for money flowing in and out of your bank account.
7 – Make note of large expenses
Often it is the large expenses that can be stressful. This might be your tax bills, annual subscriptions, software renewals or insurances. If these are always forgotten about and cause a dent in your cashflow. Then make a note a month in advance in your calendar to prepare for these.
Top tip – I also set aside money each month for these into a savings pot in my starling account so that I have the money ready.
8 – ‘Emergency fund’ or buffer
Allocate a small amount each week into your ‘emergency fund’ or buffer account so that you build up a nice cash reserve ready for any emergency.
If you need any help or to discuss any of the above points then just get in touch.
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Thank you for reading this weeks blog – 8 Easy Tips To Increase The Cashflow In Your Small Business.