Building a business with a steady and healthy cash flow doesn’t come easy. It’s all about managing it correctly in order to get the right balance.
From time to time you may feel like you need an injection of cash in order to boost your cash flow. At times you may be waiting for that next sale in order to ensure you stay out of the red. Even the most successful of businesses struggle with their cash flow. With the right advice and the right mindset you can ensure that your cash flow is steady and eventually healthy enough not to worry about it.
Having a healthy cash flow is critical to the future success of your business. If it spirals out of control you could find yourself unable to pay bills which will result in bad debt and give your company a bad reputation and that’s the last thing you need when growing your business.
So, how can you improve your cash flow?
1. Review your outgoings
This may sound really obvious but it is surprising how many businesses we speak to who don’t review their outgoings on a regular basis. You may be paying for subscriptions which you simply just don’t need, or you could be paying over the odds for the things you do need. Regularly reviewing what’s leaving your bank account will ensure that you cancel anything which isn’t necessary and help you to cut costs. Your bookkeeper can help you to audit your accounts in turn saving you money on those unnecessary non-essential outgoings.
2. Review your pricing
Make sure you are charging your worth!
So many businesses start out in business offering their products or services at a cheaper rate than competitors in order to stand out from the crowd and win business. This is all well and good but it’s not sustainable if you want a healthy business. Increasing your prices means that you are not putting in extra work, but you are receiving more money, the perfect scenario for your business. Explore your options and test the water with clients to find out their opinions, you will be surprised at how much people will be willing to pay once they have already bought into you.
3. Keep on top of your books
By hiring a bookkeeper you will always be in the picture when it comes to your finances. If you supply your bookkeeper with all the information they require by the deadlines they set, you will have access to accurate reports of your financial position. This means that you can make important, business critical decisions so that you don’t put extra strain on your cash flow. Your bookkeeper can also help you to set financial goals and help you to put the steps in place in order to achieve them.
4. Invoice on time every time
This may sound like a really simple solution but the quicker you get your invoices out to your clients the sooner you will get paid. The longer you leave it the more difficult it will be to get paid especially from those clients who like to drag their heels! Give your clients an incentive to pay on time by introducing late payment fees or discounts for paying early. Review your invoice format and make sure that your payment terms are clear and the due date stands out to the person reading it.
5. Don’t use your business account for personal transactions
We can’t stress this enough! By keeping your personal spending separate from your business, not only will it make your accounts more accurate and easier to reconcile, it will also ensure that you are not spending cash which is vital to your business.
If you need help with improving your cash flow then please get in touch, we would love to help!