4 easy ways to improve your cash-flow
One of the biggest challenges faced by the majority of SME’s is how to improve their cashflow. Poor cashflow arises for a number of reasons ranging from waiting on late payments to simply not selling enough of your products or services. Not having enough cash reserves can leave your business in an incredibly risky position and cause many a sleepless night.
There are several measures you can take and strategies you can adopt to help you avoid the poor cash-flow trap.
- Increase Sales:
It may seem obvious but the first thing you should do is take a look at your sales figures…are they where they really need to be? Selling more of your products and services is not just a potential solution to the cash flow problem but also to nearly every other challenge your business faces. How much time are you spending on finding new customers and do you really have a strategy in place?
2. Reduce the risk of late payers
One of the other main reason businesses find themselves with poor cash-flow is waiting on late payments from their customers. There are several ways you can reduce the risk of this happening; firstly, consider the payment terms you are offering…are they too generous? This might seem like a difficult question to be able to answer. However, there are several ways in which you can check either a person or even a business’s credit rating which will then help inform what kind of payment terms you should offer them. Also, consider setting your regular customers up on a direct debit as this gives you much more control over when the payments are made to you.
3. Reduce your costs
You could adopt the ‘tighten our belts’ approach where you look to reduce any particular costs that you may have. This could be something as simple as having more meetings in your office instead of at the local coffee shop. Or, it could be an ‘across the board’ cost saving exercise where you evaluate all your costs and search for cheaper options. When was the last time you looked for a cheaper energy supplier, or telecoms package or even a cheaper hosting package for your website?
4. Get a better view of your company’s finances:
Having a real-time view of your company’s finances using an online platform like Xero or Quickbooks is not just a great way to see what your business has been doing but also where it might be heading. This is also something that your accountant can (or at least should be able to) help you with. We provide some of our clients with an 18 month forecasted report of all their tax due dates and estimated amounts. Knowing when and roughly how much they will need to be paying to HMRC over the next 18 months means they can plan the rest of their finances to ensure good cash flow is maintained.
Talk to us today about how we can help you improve your company’s cash flow