Cash flow (or the lack of it) has the ability to make or break any business. You could be making a tidy profit, but if your books aren’t balanced, or the cash is flowing in the wrong direction, things are going to go south quickly. So what can you do when your cash flow situation is starting to look dire?
Keep better books
We know all too well that running a business is hard work, and keeping on top of your books can be a challenging task. But it’s one of the most important if you want to keep on top of your cash flow. Good record-keeping lets you have an instant snapshot of what’s going where – and if you flag any anomalies in the early stages, you can fix the problem before it gets to the dreaded point of no return.
If doing it manually is all too much, don’t be afraid to in call in the experts and hire an accountant to do it for you. An expert’s advice could be just what you need to give your business a well-needed boost.
Get up to speed with your invoices
It might sound obvious, but issuing invoices promptly will often result in an equally prompt payment. If you’re late or lax with your invoices, then expect the same treatment in return. Work out a system to help you keep on top of them – issue promptly and then send out reminders after 30 days (a gentle nudge usually works – any longer and you may need to be less gentle).
Accounting programmes like Quickbooks Online have a feature which can automatically issue invoices and reminders, as well as allowing you to issue an invoice from just about anywhere from your phone or tablet. Clever stuff!
Recover any debt
Bad debt is almost inevitable for any small business. A Company Check survey found that over half of small businesses have had to write off debts. It can be crippling for business, and sometimes you need to take drastic action. If your repeated nudges haven’t worked you have a few options. If you have the time and inclination, you can start Small Claims Court proceedings. If you have the time but no inclination, you can employ the services of a debt collector. And if you have neither, you can ‘sell’ your debt, using some form of invoice financing. You’ll get back less than what you’re owed, but if you’re in dire straights, some cash is better than no cash.
Have a sale
It’s simple, it’s no-nonsense and it’s a tactic as old as time. By temporarily dropping prices, you can quickly bring in some well-needed funds. It’s not a viable long-term solution, but it could just get you out of a bind. And it might just draw in some new lifetime customers.
Get better at forecasting
Being good at forecasting your cash flow doesn’t mean you have to be a fortune teller. With enough history, once you get to grips with the numbers, you can develop a canny knack for predicting where your money will come in and out. When your forecasting is good, it will point out areas you can quickly pull cash from when the coffers are looking dry. A decent forecast will also help you to choose where and when to best spend your money (or make cuts) for the best possible outcome.
To find out how we can help you manage your cash flow more effectively, drop us a line today.