3 Simple Ways To Improve Your Cash Flow This Financial Year
As we wave goodbye to the end of the financial year for 2016/2017 and move on to 2017/2018, it is easy to get excited. A new year provides so many opportunities for growth, change and development – what’s not to get excited about! The start of the new tax year is also a great time to plan ahead to maximise your cash flow.
Here are three ways to help improve your cash flow this financial year.
Change those payment terms to benefit your business
Are there changes you can make to your policies to ensure that money comes through the door quicker? Can you ask clients to pay upfront or place a down payment in advance on large projects, so you are not out of pocket? Could you consider changing your terms for payment to ‘in full upon completion’ rather than extending them by another 30 or 60 days upon completion? Requests like this make smart business sense, particularly for small business owners whose cash flow may not be as fluid as they would like.
Set up a plan to collect late payments sooner rather than later
Naturally, you hope that everyone will pay their bills on time, but sometimes that is not always the case. Things happen in a person’s business and personal life that may affect their ability to pay on time. So if and when that happens, you need to have a set plan of practices in place and be diligent in collecting from day one. The longer you leave it to collect the late payments, the harder it can be to receive the money. Send polite notices on the first day the bill is overdue. Quite often it may just be a clerical oversight and save you a lot of stress.
Have backup cash or credit available in an emergency
You may not have a few thousand dollars in the bank to just leave sitting around in case of emergencies and that is okay. For those situations where cash is just not available, it is worth setting up a line of credit at the bank in the form of a credit card. Depending on your situation, you may even need to look to alternative lenders such as invoice factoring financiers or other similar bodies.
Regardless of the size of your business, keeping an eye on your cash flow is always important. Regular analysis will keep it flowing when you need it. And don’t forget that even the smallest of changes can have a huge impact on those numbers.