In this blog, we discuss practical strategies for maintaining positive cash flow, handling shortfalls, and planning for growth.
Monitor Cash Flow Regularly
📊 Regularly reviewing your cash flow statements helps you understand your business's financial health. This can be a simple as keeping a spreadsheet to identify upcoming income and expenses flowing in and out of your business bank account, and knowing where your next cashflow pinch point might be.
By analysing inflows and outflows of cash in your business, you can make informed decisions about making that purchase and identify potential issues before they escalate.
Implement Efficient Invoicing
📨 Send invoices promptly and consider setting clear payment terms. Under contractual law, you have more grounds to recover outstanding debt if the payment terms have been set and the expectation is clear before goods and services are provided. It’s worth spending the time to get this set up correctly so everyone is on the same page from day one.
Encourage early payments by offering small discounts and implement late fees for overdue invoices to maintain consistent cash flow. Set your accounting software to send automated invoice reminders to customer who pay late, so that you don’t have to spend time chasing money until you know you have to.
If you need to, escalate the debt to a collector and ensure your terms (discussed above) include a clause to cover you that the client pays for the collection costs and any legal fees incurred. That way if the worst does happen, you won’t be out of pocket in the long run.
Manage Expenses Prudently
💼 Regularly review your business expenses and identify areas where you can cut costs. Pay special attention to regular subscriptions or payment plans. Sometimes it’s easy enough to sign up to a free trial for an app or software, then suddenly, your bank account is being debited regularly for various services you may not be using.
Negotiate with suppliers for better terms and explore bulk purchasing options for cost savings. Can you get a loyal customer discount? What about free into store if you order a minimum number of products? If you do minimum orders, how long are you going to have to wait until that stock sells?
Conclusion
Our team can help support your cashflow by monitoring the inflows and outflows, identifying potential pinch points and chasing up debts owed to you. Get in touch to find out more.
