When cash flow dries up, business problems start to multiply – therefore, it is important to keep cash flowing in-and-out and implement strategies that can help your business weather any storm. Agilis CA can help you with creating strategies that will allow you to maintain a healthy cash flow.
Small businesses are particularly vulnerable in tough economic times.
When sales are slow, there are still overheads and salaries that need to be sorted. Pre-planning and being proactive can help you weather tighter economic periods and allow you to continue to thrive.
Make sure you have a clear picture of your payroll, and any other planned expenses that will need to be accounted for.
If there is even a possibility that there could be a shortfall, it is essential to meet this head-on; whether this means talking to your supplier or creditors to figure out an arrangement, or compromising on other business outgoings – you must plan to ensure that the business, or your staff, will not suffer.
Minimize the Stress of Cash Flow
Here are some ways you can minimize the stress of your businesses cash flow:
- Send any invoices that you can, and in advance if possible. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make a purchase from you in advance.
- Use this opportunity to chase up any outstanding payments. Strong communication and relationships matter – talk to clients and chase invoices.
Talk to Suppliers.
- A little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship.
- Can you find a cheaper supplier locally to avoid the shipping costs or discuss alternative products that allow you to reduce expenses?
Review your Costs.
- It is also a good idea to do a general review of expenses. Business costs can creep up, and it is a great idea to make a time to check on your expenses regularly, no matter what your financial situation. Review all your regular payments and subscriptions as well as upcoming costs. There may be travel, functions, or purchases which you can decide on an alternative approach to.
Talk to the Bank or Tax Department.
- If cashflow is tight, make sure you have conversations early, so you have everything in place to see you through.
Improving your Cash Flow
Here are five tips for improving your cash flow:
1. Having a System to Manage your Debtors.
Come up with a clear, step-by-step way to handle outstanding accounts. This may include:
- Automated reminders on unpaid emails.
- A phone call or email when the amount has been outstanding for a certain period.
- A stop credit on the client when they exceed an acceptable payment time.
2. Be Prepared for Tax Time
One of the fastest ways to run out of cash is to find yourself short at tax time. Agilis CA can help with this – together we can come up with a system to help you put enough aside each month, so you are never caught short. You can also use tax pooling or other options to smooth out your cashflow.
3. Try Not to Dip into Business Funds for Personal Spending
It is always tempting to tap your business account for personal spending. Instead, try to keep them separate. If you have over saved at the end of the tax year, you can draw down a nice bonus – that is much better than being caught short.
4. Sell Old Stock
Too much stock? Consider old stock, old furniture, machinery or even stationery – they can all be sold to free up space and provide a small cash injection.
5. Forecast your Cash Flow.
Create a cashflow forecast (Agilis can do this with you) that will help you monitor and measure the flow of cash in and out of the business.
Talk to us about implementing cash flow strategies.
Agilis CA can help you implement strategies to protect your business long-term and help alleviate cashflow worries. Contact us today!
This blog was originally published by BOMA, but has had edits made by Agilis CA for the benefit of our readers.