5 Ways to Improve your Cash Flow
In our last blog, we discussed ways of managing your cash flow. We know that cash is the lifeblood of any business, so here are 5 more tips to help you improve your cash flow.
If the cash dries up, problems quickly begin to multiply. By keeping the cash running freely and you can continue to grow your business.
Here are five tips for improving your cash flow:
1. Have a system to manage your debtors.
Come up with a clear, step-by-step way to handle outstanding accounts. This might include:
- automated reminders on unpaid emails
- a phone call or email when the amount has been outstanding for a certain period of time
- a stop credit on the client when they exceed an acceptable payment time.
2. Be prepared for tax time
One of the fastest ways to run out of cash is to find yourself short at tax time. Talk to your accountant about tax planning measures you can implement to ensure you can make your compliance and tax obligations.
3. Try not to dip into business funds for personal spending
It’s always tempting to tap your business account for personal spending. Instead, try to keep them separate. If you’ve over-saved at the end of the tax year, you may be able to draw down a nice bonus. That’s much better than being caught short.
4. Sell old stock
Too much stock? Consider old stock, old furniture, machinery or even stationery: they can all be sold to free up space and provide a small cash injection.
5. Forecast your cash flow
Create a cash flow forecast (we can do this with you) and that will help you monitor and measure the flow of cash in and out of the business.