One of the things many business find a burden is that cashflow can easily get out of hand and several studies suggest that financial miss-management is one major contributor to business failure. Here are 5 tips to help get cashflow under control – remember it is an on-going monitoring that keeps you on top – measure and tweak, measure and tweak…!
1. Look at who owes you – WEEKLY – check your debtors/accounts receivable report every week – get onto those tardy payers – send Statements every Fortnight! A month is too big a gap and easy to slip the mind…
2. Plan for highs and lows
Be aware of possible lean cashflow patches coming up and plan for them!. Avoid major purchases from your business’ working capital unless you are sure you have cash to cover it. A cashflow budget will help you see this – eg when revenue is down on forecast you expected (eg the average monthly required, or based on same time last year, or certain % growth if that is the current trend).
3. Have finance products working to your benefit
Overdrafts, premium funding, lease facilities and cashflow funding products can all be excellent tools to help boost a business’ cash. Even the business credit card can be a good way to ease the squeeze as long as you are sure the debt can be paid before interest kicks in, which is the best way to handle credit cards!
4. Avoid penalties
Keep on top of taxes and compliance to save the cost of fines… and the stress!
5. Keep your hands out of the till.
Make cash drawings for personal purposes as minimal and follow conservative cashflow forecasts. Take a weekly wage for yourself so it’s easier for the bookkeeper/accountant, and gives stability to regular expenses and drawings so you can PLAN better!
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