Whether you’re a small business with 10 clients or a large firm with 1000 followers, you need a decent cash flow to operate successfully. Having a decent cash flow doesn’t mean that you can only pay your rent for the next few weeks, you should have at least 3 months of operating costs in the bank. This enables business to operate as normal in the quieter months or in the case of an emergency. Below are some tips on how to be confident in your cash flow. Cut the stress, read the tips below and contact us today on (08) 9474 6333 for a free business review!
1. Know your Budget!
Budgeting isn’t easy but it is a necessity in business. Having a strong cash flow is the difference between growing your business and struggling to pay your employees. No one wants or needs that stress in their life so it’s best to get on top of your budget early. If you need to keep 3 months ahead, put an extra 15% away into an emergency fund. You’ll thank yourself on a rainy day.
2. Start the conversation early.
You shouldn’t be afraid to get the ball rolling early. A business performs a service for another business or individual for the sole purpose of getting paid. Start the conversation early, be upfront about your fees, payment options and terms. No one enjoys the nasty surprise at the end of the job and clients value honest information in front of them. Some small businesses choose to carry an iPad, tablet or phone with them when they go out on a job. This enables them to bill instantly as soon as the service is completed. The sooner you bill, the sooner you see the cash.
3. Cut costs
Some small costs can accrue unnaturally fast. In saying that, its common sense that if you cut costs, you’ll have more cash flow left in your bank account. Some costs can be cut just by acting meticulous with supplies; reducing your stationary order, sending mail by email instead of post or even reducing software costs for programs don’t take full advantage of.
4. Email Alerts
Keep on top of your bank reconciliations and continually check who has and hasn’t paid you. Email alerts are one of the most convenient ways to remind someone about payments, it also means you can make the process easier for you and your client with the option to imbed easy pay options. This enables the client to pay you instantly no matter where they are in the world. Whether your reminders are sent every 14, 7 or 2 days, they are an efficient and essential means of a steady cash flow.
5. Review your Work Procedures
Have you ever forgotten to invoice a client? It’s more common than you think and one of the biggest contributors to the issue is lack of time. As we increase our business, we need to continually review and change the way we do things. If you’re forgetting to invoice a client, invest in software that will make invoicing simple and easy. Xero has an impressive invoicing solution that can be directly sent to the clients account and stored. (Please note; If you would like a solution to a software issue, my best advice would be to contact one of our accountants to discuss it further (08) 9474 6333)
As business advisory specialists, the team at Forward Focus is well equipped to increase your cash flow. For the month of SEPTEMBER, we are offering FREE NO OBLIGATION business reviews. If you require an appointment, contact the office today or email email@example.com for more information.