Improve Your Cash Flow Relationship Today
If you believe that your cash flow situation will right itself without attention, then think again. The only way your relationship with your cash flow will improve is by giving it the attention it deserves. If you are not monitoring your cash on a regular basis, then you may just find that your cash supplies will run dry. Limited cash flow is the reason many small, medium and large sized businesses close down every day. No one is immune.
Keep an eye on your cash flow
Understanding your cash flow makes it easier to plan ahead. If you have been in business for at least one calendar year, you will have a better understanding of the ebbs and flows of business. If you are in retail, for example, you will know your organisation will have more customers from October through to December. Or alternatively, you may be a service-based business who understands that the holiday season will be quieter as the majority of companies close down to give their staff a much-needed break.
Doing a cash flow forecast will enable you to manage your expenses. It will also allow you to calculate just how much cash you may have in the bank at any given time. Of course, if you need to make any sizeable unexpected cash purchases, then your cash flow forecast will need to be adjusted accordingly to take the expenses into account. A regular check-in and balance will ensure that you are on track.
Hire a bookkeeper
If you don’t feel you are the best person qualified to manage your books, then it pays to outsource this service. Your bookkeeping is important for accuracy and will make it easier at tax time when it is time to fill out your tax return. Make 2018 the year to get organised in terms of your bookkeeping and look into an efficient accounting system such as Xero.
Using a system which utilises cloud-based technology means you can check in on things from anywhere in the world. It gives you flexibility if you need to work from home due to a family emergency or cannot make it into work for one reason or another. Speak to our qualified and certified bookkeeping team for more information on how we can help your business move forward.
Update your payment policies
If you find that you are paying invoices on 7 to 14 day-terms and invoicing on 30-day terms, then your cash flow will be limited. Make sure that your cash payment policies are working in your best interests. You want to ensure that you are getting paid as quickly as possible, while delaying payment as long as you can.
Try to offer as many convenient ways for your clients and customers to pay their bills. Popular methods include credit card payments, Paypal or bank deposit. Cheques are still used although they seem more cumbersome in today’s electronic age and can often delay the payment to your bank. Fast online methods will work more in your favour and ensures that cash will hit your accounts quickly. Do make sure you have some form of debt collection strategy written into your policies so it comes as no surprise.
Enforce late payments
If you find that many of your clients are paying late, then advise them that this will not be tolerated. Your clients need to know that you intend to follow up on any late debts. This also means taking the necessary steps and actions until the amount owed is paid. Contact the client as soon as the debt becomes overdue and let them know that their payment must be settled immediately.
Give them ample time to make amends and follow up again. It may be necessary to implement a late fee if you have clients who continuously try to take advantage of your good nature. On the other hand, you could also introduce a small discount if your invoices are paid before the due date. Whatever works!