How to Manage your Cashflow
Cashflow is the biggest problem that small to medium sized businesses face. It is THE most common reason for a business failing. As a business owner you need to control your cashflow – which means making sure that enough money is coming through the door, at the right time, to cover your outgoings.
How to Manage your Cashflow
Bill Faster
Bill as soon as you can. Keep your payment time as short as possible. Make it easy for people to pay you. Include a “pay now” button on your invoices, set up direct debits for regular clients and/or use an online payment system such as Stripe or PayPal. Set reminders to go to businesses who don’t pay on time and think about adding in a late payment penalty for late offenders.
Control Spending
Martin Lewis from Money Saving Expert says that before you buy anything ask yourself
“WILL I USE IT? IS IT WORTH IT? HAVE YOU CHECKED PRICES ELSEWHERE?”
The same ethos should apply to spending money in your business. Business money is ultimately your money so be careful before you splash out. Always have some money in the bank to see you through troubled times and if you are going to spend, make absolutely sure that you have the cash and that you still have enough to cover your outgoings.
Know your Numbers
Do you know how much money you’re actually making in your business every month/quarter/year? How much of it will be paid as tax or overheads/expenses?
Well, to control your cashflow you need to understand how and when money is coming into your business and when it’s going out. This doesn’t have to be complicated, but you do need to find a system that works for you. Guessing doesn’t work. Online Accounting systems go a long way to semi-automating your bookkeeping (which reduces the time you spend working on it) AND keeps track of your cashflow (winner/winner).
Cut Overheads
Do not pay over the odds for utilities, insurance and rent. Negotiate on these things; Talk numbers with your landlord or insurance company – after all, this is good business sense and if you don’t ask you don’t get.
If your suppliers up their prices don’t just accept it; talk to your supplier and negotiate. Shop around and compare prices. Yes, it takes a bit of time but cost savings impact your bottom line (which means more money in the bank).
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How to Manage your Cashflow
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