Tips on how to improve your cash flow
Cash flow is one of the biggest issues for small businesses. It is important to get an in-depth cash flow analysis to determine if your cash flow is positive based on budget estimates and current actual results.
Improve your bottom line by creating cash flow reports and strategies. Find out if you are sitting on too much inventory and understand when cash is available. Anticipate and analyse your key expenses and prepare for taxes, expansion and stock control.
- Be proactive in shortening your receivables to boost your cash flow. It is important to set time to manage this on a regular basis. Sending invoices immediately after the delivery of goods and services or changing your payment terms from 60 to 30 days may be a good idea. Monitor your cash flow budget monthly.
- A good and proactive accountant may also be a good investment. He can help you review your cash flow projections and results and give insights into areas that can easily be overlooked. He can help anticipate and plan for potential cash flow problems as well.
- You may also want to use a credit card that will allow you with up to 55 days after statement to pay for goods and services. If you can manage this properly, it can reduce your interest and financing costs. Consider using an EFTPOS system or offer card payments to speed up imbursement from customers as well. This can improve your cash flow and save time for debt collection and follow up phone calls. You may also offer incentives or a small discount for customers using their credit card to pay.
- It may be a good idea to match your finance with the period it relates to. Long term finance can be for assets that you have owned for a long time while short term finance can be for those problematic issues that may arise. A line of credit can be handy in times of need and emergencies. Rates are now competitive and you can use your credit line when necessary and pay interest only.
- If you work in your business, pay yourself a fixed wage on a regular basis so you don’t draw excessively. Some businesses pay a dividend twice a year by paying half of the cash profit in dividends and retaining the other half for investment purposes. Don’t forget to factor the tax bill, GST or outstanding debts before you take the cash.
As you look for different ways to grow and improve your business, seeking professional advice from a business consultant could prove to be an important and helpful decision.
You can click here to speak to business experts. We would love to help you formulate investment strategies and streamline your processes to take your business to the next level. Our goal is to help you grow your business, find ways to invest more and increase your productivity.
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