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Cash flow tips to improve your business

Posted on Jan 24, 2018 by admin

Poor cash flow is one of the biggest reasons why small businesses fail.

A healthy cash flow allows you to operate your business free of hassle; allowing you to pay your staff and bills on time. Having enough working capital to meet your business’ needs can help you stay out of debt and in business.

Consider these three tips to improve your business’ cash flow:

Create a forecast
Predict your sales and outgoing expenses for the year. You may do this by looking at last year’s sales figures and adjust accordingly. When estimating inflow, account for GST rebates, tax refunds, additional equity added to the business via owners, government grants, loans paid back, etc. Calculating outflows means you need to factor in administrative and operative costs. Also, consider expenses such as buying new assets, ‘one-off’ fees, loan repayments and so on.

Reduce overheads
Consider leasing major assets instead of purchasing them to avoid tying up money in assets that will depreciate over time. Look for ways to cut back on spending such as lowering electricity bills and seeking better deals on insurance and internet costs. You may choose to negotiate payment terms with your suppliers, for example, extending your time frame to pay quarterly.

Control your invoicing
Issue invoices on time and be prepared to follow up on them if you are taking cash flow seriously. Send the invoice separate from other documents and make sure it is sent to the right person. For speedy payments, make it easy for customers/clients to pay you by providing multiple payment options. Automate reminders in your accounting software to notify overdue customers.

Nicoll Jackson give you peace of mind by looking after your financial and accounting operations.

We also use our business advisory expertise to monitor your business, giving you
proactive advice on how you can improve your bottom line and net worth.

Contact us today