5 Ways To Avoid Cash Flow Problems In Your BusinessJun 29 2017 in Business Cash Flow
Until you can generate sufficient cash reserves to allow you some breathing room when it comes to expenses, cash flow finance should be at the front of every business owner’s mind. These simple and practical tips can help you avoid being short on cash, even though a big cheque is on its way to you.
Create a cash flow forecast
A cash flow forecast is a prediction of all the income and expenses for your business. Forecasts can cover a few months to a few years, and you’ll be able to put one together with the help of an accountant.
These forecasts can be used to identify when your business will run at a cash flow deficit or surplus, as well as how your predictions and budgets line up with actual income and expenses. If your bank statement doesn’t meet your predictions, use the following tips to address any issues and improve your business’s cash flow.
Limit bad debts
If your client can’t pay an invoice or outstanding account, you may be in cash flow trouble. To limit losses, try introducing a maximum on store credit accounts, or consider conducting a credit check on prospective customers.
At BCashflow Positive, we provide credit checks on prospective customers to our clients free of charge. If one of your clients is regularly late to pay invoices, politely ask for at least partial payment upfront and reconsidering whether to continue to trade with them.
Buy stock often and in smaller quantities. Rather than buying all of your supplies in bulk, consider buying smaller quantities more frequently. While not netting you the same ‘in bulk’ savings, this can help your cash flow by spreading your expenses out more regularly.
Reassess your expenses
If your cash flow forecast brought your attention to excessive expenses, be sure to investigate these to see how you can save. When it comes to bills and utilities, paying in monthly installments rather than quarterly or annually can help you avoid large outgoings.
If your energy bills are higher than you expected, look at installing energy efficient appliances or looking for an energy plan with better rates or discounts to help you save money. Finally, always shop around to see if another supplier can cut you a better deal on a product you buy regularly.
Consider Cashflow Finance
If you’re planning on expanding your business, or need working capital so you can fill a big contract or order, consider services like Cashflow Finance. Cash flow financing allows companies to finance slow-paying accounts receivable, by passing on outstanding sales invoices to a cash flow finance company ( such as BCashflow Positive) for immediate payment. You can get up to 90% advance on the face value of your invoices in as quick as 24 hours.
Call us now on 1300 937 292 to find out how, or fill out our quick contact form and a cash flow expert will be in touch shortly.