The lifeblood of any small business is all in the cash flow. The best way to increase your business cash flow is to have a written cash flow plan and to follow it. We recommend using the following strategies to improve your business cash flow:
- Work with an accountant that focuses on small business.
- Use real time software to manage your books such as Xero. This will enable you to have a clear and current picture of your profit and cash flow.
- Analyse your cash flow regularly.
- Ensure more money is coming into your business:
- Establish a clear payment policy and communicate it to your customers.
- Offer discounts if your clients pay upfront or early.
- Offer multiple payment options such as ezidebit.
- Follow up your debtors. Software such as Xero can do this for you automatically by sending your customers email and text reminders.
- Think twice before purchasing new items of equipment. Saving a few dollars on tax may not be the best option if your cash flow cannot support the purchase.
- Lease equipment instead of purchasing.
- Invoice upon provision of service or item without any lag time in between, and encourage upfront payment.
- Negotiate better pricing and longer payment terms with suppliers.
- Regularly review inventory to ensure that you are not holding too much stock. Consider drop shipping or direct-to-door delivery from your suppliers to your customers.
- Reduce your overheads such as staff overtime, insurance expenses and phone charges.
- Consider an overdraft facility or line of credit as a fall back option in case you get stuck.
