Cash is the most important part of any business and what ultimately keeps it going whether that be profit, paying employees or expenses. All areas of cash management are vital! Here we have a few tips to make sure your cash flow remains strong.
Analysis
An essential part of any business is forecasting cash flow, so help yourself achieve full visibility by using technology to help you. Software tools are available that can easily pick up on any dangers ahead with the analysis of client payment histories set against how long one can go without making payments.
Cash flow is influenced by key metrics such as credit terms, inventory and accounts receivable and payable. The technology will help give better insight into each of these sectors making it easier to identify any problems and solve them quicker. We can recommend tools and services to help your business manage cash flow sufficiently.
Receivables
Healthy cash flows can only be maintained if you get paid, so there are a few ways you can speed up the turnover time on receivable income.
Offering money off for prompt or early payments and deposits on orders is one way to motivate people to pay. Using credit checks for new clients will give you an idea on whether you will get paid on time or not.
If you sell products or services online, make sure your website works properly and is accessible for mobile and desktop devices.
Make sure making payments is as easy as possible with services such as PayPal which is great for easy cash transfers.
Stay On Top Of Pricing
When growth occurs within your business it is easy to get carried away, but by keeping an eye on your pricing and increasing costs, you can anticipate any cash flow problems with ease.
It can be tempting to maintain your prices as you fear losing loyal customers, but small increases are expected and will be respected by those who buy from you as you grow. Remember to inform people of any future changes in a transparent manner.
Stock Sensibly
You may be a business that requires certain specialist products or services from a certain merchant, but when it comes to everyday items you require, don’t feel obliged to go to the same merchant for everything.
If you purchase goods from a variety of vendors or cheaper dealerships then you can easily make big savings. This also means that if there is a supply shortage at some point, you’re likely to have an alternate means of getting the products you require.
Try not to exceed any industry standards when it comes to your own inventory with regards to how much you need. Large discounts will usually be offered for bulk buying but if you don’t need it, don’t buy it. Make sure you have enough of everything with regular stock takes before buying anything in bulk!
Prepare For Highs & Lows
For small businesses, hard times can often outweigh the growth periods. Keep focused in order to maximise cash flow and profit.
In leaner times, banks can be really useful to turn to, but make sure you have a clear business plan in space as this will make you more likely to secure any funds you need.
Free up cash flow if needs be by renegotiating terms as people you buy from will often have an interest in your financial health as it will also benefit them to keep you as a loyal customer.
We hope these few tips help you organise your cash flow better. If you’d like any expert advice from our accountants in Milton Keynes, do not hesitate to request a free call back on our website or call 01908 046964.