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10 Ways to keep your cash flowing

Updated: Apr 10

A common mistake small business owners make is confusing profit and cash. Do you open your bank account and wonder where your cash has gone? Do you feel like you've lost control of your cash on a day to day basis?

cashflow help for business owners

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.

Our role at Purple Accounts is to help you become much more aware of the cashflow cycles in your business and to challenge you to do a few things differently to help your business.

To start, here's 3 key facts about cashflow:

  1. Without cash your business will not survive

  2. Managing cashflow is integral to your business processes

  3. You need to understand your key cashflow drivers

Here's 10 ways to improve your cashflow.

1. Reduce overheads

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

4. Boost your gross profit

  • 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)

5. Improve accounts payable process

  • Ask or look for prompt payment discounts from suppliers

  • Ensure you’re not paying late payment penalties or interest

6. Improve your accounts receivable process

  • 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

7. Review your debts

  • 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

8. Monitor and forecast

  • Create a financial plan and cashflow forecast with help from your accountant

  • Keep everything up to date and review each day/week/month/year

9. Control your inventory process

  • 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

10. Get an expert

Don't be a slave to stuff you don't need to do. Many business owners think they will save money by doing the donkey work themselves. But this is not the case and your accountant should be seen not as a cost but as a value driver and trusted expert to help your business grow.

Next steps:

The focus is on improving your bank balance, so firstly ask yourself..

  • 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?

Prioritise the 10 steps in the order most relevant to your business and build a short action plan.

Get in touch with us and find out how we can help you and your business achieve your true potential.


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