David Parker
Updated: Apr 10
It's more important than ever to get to grips with your cash flow and make a sound plan to take control.
Did you know?
A profitable business can go out of business if it’s starved of cash.
A business making a loss can survive with access to funds from the owner, investors or funding
It's not enough to just look at your profits - every business owner needs to understand how cash moves through their business and the key drivers that can affect it.
Most business owners tend to wipe all the cash out of their businesses - living in the now and not planning for the growth and the future. In addition, looking back retrospectively as with traditional compliance tasks does not help your cash flow.
Without cash your business will not survive
Managing cashflow is integral to your business processes
You need to understand your key cashflow drivers
Here's 10 ways to improve your cashflow.
Review your overheads regularly. Identify non essential costs and get rid. Control expenses and staff expenses tightly. Find spare capacity in your team to optimise their value
2. Go digital
Kiss goodbye to show boxes and bags. Use Hubdoc or Receipt Bank to get your receipts to your accountant quickly and easily. Make sure your bank account is linked to your accountancy software such as Xero or Quick Books so your financial information is at your fingertips 24/7
3. Increase sales
This can be achieved in a variety of ways:
Generate more leads
Increase conversion rates
Increase customer spend and frequency
increase customer retention rates
Increase customer referrals
Negotiate terms with suppliers or look for alternative suppliers
Avoid giving your time and products away for free and doing favours
Reduce wastage and review your ordering levels
Review your systems and processes (Try Sweet Process)
Ask or look for prompt payment discounts from suppliers
Ensure you’re not paying late payment penalties or interest
Invoice on the go (use Xero)
Obtain payments in advance of the work, take a deposit or provide stage payments
Make it easy for customers to pay you
Check and review interest rates
Review how much you’re taking out of the business
Look at grants and tax relief/s you may be able to claim
Create a financial plan and cashflow forecast with help from your accountant
Keep everything up to date and review each day/week/month/year
Get a stock control system or make your current one more efficient
Find areas for improvement
Identify stock shrinkage and how this is being controlled
Do you have a Cashflow Forecast? (a 12 month report showing the cash flowing in and out of your business)
Do you keep your accounting software up to date?
Do you have a trusted expert to hold you Accountable to your plan?