Many business owners notice money drifting out of their accounts far too easily which can make it difficult to maintain a healthy cash flow.
Keep your business bank balance looking good with these 10 clever tips.
Learn from history
When you’re forecasting, historical revenue data is extremely valuable. If you’re new to business and only have a couple of years’ of data, talk to friends in your industry, and prepare a worst case scenario along with a realistic scenario.
Be careful with the phrase ‘spend money to make money’
We’ve all heard it – you need to speculate to accumulate. There’s some truth in it, but budgeting and saving is far more valuable. To keep cash flowing healthily through your business, calculate the long-term value, benefits, and cost of everything you invest in.
Haggle with your suppliers
The better your relationship, the more flexible your suppliers might be. If you’re a loyal, regular customer, they’ll be far more likely to let you pay in installments, or even give you a discount. It never hurts to ask (as long as you’re polite).
Have a stash of cash for unexpected expenses
No matter how carefully planned your cash flow forecast, events will get in the way. Keep some savings locked down purely for emergencies. Even if the amount saved doesn’t cover it, you’ll have a bit of a cushion.
Have contracts and agreements in place
Outline responsibilities in writing before you start working with a new customer. If you’re expecting an upfront payment, or you’re often waiting for invoices to be processed, it helps to refer to a contract.
Be strict about collecting payments
Whether you’re hiring out your pub function room, or booking a wedding party for hair and makeup in your salon, get a chunky deposit or ask for prepayment. Stick to a routine and you’ll always know who’s on time and who needs chasing.
Keep checking your inventory
Over-ordering easily becomes “dead stock”. It’s taking up space, won’t last forever, and your priorities could shift, making it useless. Buy what you need, not what you think you’ll need, and be creative with the stock you already own.
Sell things you don’t need
The equipment you used to consider vital could now be covered in a dust sheet. Free up some space and liquidate old assets by selling items which still have value. Even if you don’t think it’s very useful, someone else might.
Brace yourself for seasonal changes
If January is notoriously difficult for businesses in your sector, it’s time to start preparing. Natural fluctuations in profitability will be easier to bear if you’ve factored them into your cash flow forecast. You might even be able to improve your year-on-year stats with some smart thinking and forward planning.
Assess your regular costs and be ruthless
Adding up your business’ Direct Debits is a good exercise if you’re not sure where money keeps disappearing to. Review all your subscriptions, online services, and insurance plans – are they essential, or should you have cancelled them a long time ago?
Are you looking for short-term finance to manage a temporary cash flow issue? A merchant cash advance works with your business cash flow needs in mind. It’s an advance of cash based on your future credit and debit card sales. You repay the money via a pre-agreed percentage of your daily card transactions. It’s designed not to impact your cash flow, we only get paid when you do so repayments will always be manageable.
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Every time money comes into your business through a card transaction, Capify take a small percentage until the finance is repaid. Get a quick quote now.Get A Quote