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Category Archives for "Cashflow"

7 ways to reduce your expenses and boost revenue

7 ways to reduce your expenses and boost revenue

7 ways to reduce your expenses and boost revenue

A recent survey showed that 32 per cent of Australian businesses list increased operating costs among their top three concerns. And rising costs can have a significant impact on your cashflow and bottom line.

So, what can you do to minimise the impact of sky-rocketing costs in your business?

7 ways to reduce your expenses and boost revenue

When costs are rising and profit margins are falling, that’s bad news for the financial health of your business. But there are ways to combat this scenario.

In short, you have two main tactics to kick into gear. You can either look at cost-cutting across all your operating expenses, or you can find ways to sympathetically boost your revenue.

Strategies for cost reduction

Streamline your operations

Look for any inefficiencies and find ways to streamline your processes and reduce the underlying costs. You can also use technology to automate key functions to add efficiency and reduce your underlying costs.

First Class Accounts Ovens & Murray specialises in helping businesses optimise their financial operations. We provide software integration services to ensure your financial data is accessible and accurate. By automating invoicing, payroll, and expense management, we’ll help you free up time to focus on the core aspects of your business.

Negotiate with suppliers

Revisit your existing contracts with suppliers and negotiate better terms, while also being mindful of the suppliers own cashflow pressures. Looking for alternative suppliers or finding cost efficiencies by purchasing in bulk.

First Class Accounts Ovens & Murray can help you integrate supplier management and purchasing apps that allow you to track and evaluate supplier performance, ensuring you get the best deals. Tools such as Unleashed can help you keep on top of orders and manage supplier relationships more effectively.

Reduce your energy consumption

Putting energy-saving measures in place, like LED lighting and energy-efficient equipment, is a move towards good sustainability, but can also help you save money. Considering renewable energy options can also help.

Manage inventory effectively

Keeping your inventory lean is a good way to optimise inventory levels and minimise your holding costs. Implementing a just-in-time inventory management cuts costs while keeping you ready to service customer needs.

First Class Accounts Ovens & Murray can assist you in integrating inventory management apps that suit your business needs. We specialise in setting up and maintaining systems like Xero, and other cloud-based apps that provide real-time insights into stock levels, automate reordering, and help you avoid overstocking or stockouts. This ensures your inventory is managed efficiently, reducing unnecessary costs and freeing up capital.

Strategies for increasing revenue

Expand your customer base

A broader customer base helps to bring in more sales and revenue. Explore the potential for entering new markets or customer segments, and boost ecommerce and digital marketing to sell more online.

Raise your prices strategically

Think about the demand for your products/services in the market and revise your pricing to keep it competitive. Be sure to communicate any price increases sympathetically to customers, so you don’t damage customer loyalty.

With the help of First Class Accounts Ovens & Murray, you can integrate pricing tools that give you a clearer view of market trends and customer buying behaviour. Apps such as Vend or Lightspeed can assist in tracking sales and help you adjust prices in response to market demand, ensuring you maintain competitive pricing without losing customer loyalty.

Introduce new products or services

If your current products/services are not selling, it could be time to diversify your offering to meet changing customer needs. Make the most of your existing resources and expertise to bring new products to market.

First Class Accounts Ovens & Murray can help you budget and forecast for these new product lines by integrating cloud-based financial apps like Xero, allowing you to track performance metrics and evaluate whether new products will positively impact your revenue.

Be proactive and protect your business

There’s no magic wand that can make the current economic pressures disappear. But by being proactive about your cost-reduction and revenue-generation, you can do your best to protect your business from the worst elements of increasing costs and an uncertain market.

First Class Accounts Ovens & Murray can help you review your current financial and business strategies to look for the best possible opportunities, whether it’s better cashflow management, cost-cutting, or revenue generation. We specialise in implementing cloud-based apps such as Xero and other integrated tools to give you real-time financial insights, automate processes, and streamline operations. Our bookkeeping services ensure your financial data is accurate and up-to-date, giving you the clarity to make decisions that reduce your expenses and boost your revenue.

By adopting the right financial and operational apps, you'll be well-equipped to stay on top of your cashflow, control costs, and unlock new revenue opportunities.

Get in touch with First Class Accounts Ovens & Murray today to discuss how we can help you reduce expenses, boost revenue, and streamline your business.

Key numbers to focus on in your business

Key numbers to focus on in your business now

Key numbers to focus on in your business now

As a business owner, it’s always been helpful to have an understanding of accounting – but in the world today, it’s never been more important to have a good grasp on your finances and understand the key numbers to focus on in your business.

For many businesses, priorities have changed, customer behaviours have mutated and revenue streams have had to evolve and pivot in order to maintain a profitable business model.

To track, monitor and drive your financial performance in this new business world, it’s increasingly important to have a handle on your key financial reports and metrics.

Getting to grips with your financial reports

In the past, extra cash in the business may have been seen as a surplus that needed to be spent on something. Recent years have shown us that having these reserves is vitally important for the survival and long-term health of your businesses.

To truly be in control of this cash, it’s vital that you can understand your accounts, financial reports and dashboards and ‘see the genuine story’ behind your financial position.

So, what are the key reports to focus on? Let’s take a look:

Budget 

Your budget is the financial plan that's tied in with your strategic plan. In essence, the budget is your approximation of the money it will take to attain your key strategic goals, and the revenue (income) and profits you hope to make during this period. It’s a benchmark you can use to measure your actuals (historic numbers) against, allowing you to see the variances, gaps and missed targets over a given period.

Cashflow Statement 

A cashflow statement shows the flow of money into and out of your business.

Understanding these cash inflows and outflows in detail allows you to manage this ongoing process, allowing you to aim for a ‘positive cashflow position’ – where inflows outweigh outflows.

In your ideal positive scenario, you have enough liquid cash in the business to cover your costs, fund your operations and generate a profit.

Cashflow Forecast

Forecasting allows you to take your historic cash numbers and project them forward in time.

As such, you can see where the cashflow holes may appear weeks, or even months, in advance. This gives you time to take action, whether it’s increasing your income stream, reducing your underlying costs, chasing up unpaid invoices (aged debt) or going to lenders for additional funding.

Balance Sheet 

Your balance sheet shows you your company’s assets, liabilities and equity at a given point in time.

In a nutshell, it’s a snapshot of what your business owns (your assets), what you owe to other people (your liabilities) and what money and profits you currently have invested in the company (your equity).

Your balance sheet is useful for seeing what stock and equipment your business owns, how much debt (liabilities) you’ve worked up and what your company is actually worth. This is all incredibly useful information to have at your fingertips when making big business decisions.

Profit & Loss

Your profit and loss report - often referred to as your P&L. Your P&L gives you an overview of the company’s revenues, costs and expenses over a given historic period of time.

While the balance sheet is a snapshot, your P&L is more like a moving video. It shows you how your finances are progressing by demonstrating how revenue is coming in and costs/expenses are going out (rather than cash coming in and going out, as you see in your cashflow statement and cashflow forecasts).

There is a range of software and apps that you can use to generate the above reports so you can understand and focus on the key numbers in your business. For example Xero

Talk to us about software and apps to help you with the financial reporting and forecasting for your business

Should you buy or lease your business assets?

Should you buy or lease your business assets

Should you buy or lease your business assets?

There are certain items of equipment, machinery and hardware that are essential to the operation of your business – whether it’s the delivery van you use to run your home-delivery food service, or the high-end digital printer you use to run your print business.

But when a critical business asset is required, should you buy this item outright, or should you lease the item and pay for it in handy monthly instalments?

To buy or to lease? That is the question

Buying new pieces of business equipment, plant, machinery or vehicles can be an expensive investment. So, depending on your financial situation, it’s important to weigh up the pros and cons of buying, or opting for a leasing option.

First of all, let's look at why you might to decide to buy the item.

Buying: the pros and cons


Pro: It’s a tangible asset

When you buy an item, you own the item outright and it will appear on your balance sheet as one your business assets. As such, by owning these assets outright you increase the perceived capital and value of your business. You can also claim the cost of the asset against your capital allowance for tax purposes.

Pro: It’s yours for the life of the asset 

Once you own the item, you have full use of the equipment for the duration of the life of the asset. Your use of the asset isn’t reliant on you being able to keep up regular lease payments, and if your financial circumstances change then you can sell the asset to free up the capital.

Con: It’s an expensive outlay

Paying for the item up-front is a large outlay for the business and will require you having the cash to cover this cost. Spending a large lump sum in this way may take cash away from other areas of the business, so you need to be 100% sure that this purchase is the right decision and a sound investment.

Con: You may require extra funding

If you don’t have the liquid cash available to buy the item outright, you may need to take out a loan. Asset finance is available from funding providers, but does tie you into a loan agreement that will add to your liabilities as a business – reducing your worth on the balance sheet.

How First Class Accounts Ovens & Murray can help

Our cashflow forecasting services can assist in determining whether you have the financial capacity to make an outright purchase. We can also implement appropriate apps to help you assess the impact on your working capital, ensuring you maintain enough liquidity to cover other business expenses.

Leasing: the pros and cons

Pro: Leasing has a cheaper entry point

If the item you need to purchase has a large price tag, leasing allows you to make use of the asset without the cost of buying it in full. For startups and smaller businesses with minimal capital behind them, this can make leasing a very attractive option. You may not own the asset, but you can make use of it – and this may be the difference between the success or failure of your business.

Pro: You can spread the cost

There is still an associated cost of leasing, but you can spread the cost over a longer period, making it easier to find the necessary liquid cash to meet your lease payments. With this money saved, you can then invest in other areas of the business, helping you to expand, grow and bring in more customers and revenue.

Con: You don’t own the asset

There are different types of leasing agreement. Under a capital lease, you do own the asset (once you’ve paid if off). But if you opt for an operating lease, this is a more short-term lease and you won’t own the asset at the end of the contract. Ownership does have its advantages (including being able to sell off the asset if required) so it’s important to consider what kind of leasing agreement you’re entering into and what the advantages/disadvantages may be.

Con: You may pay more in the long run

Most leasing agreements will attract additional costs and interest on your agreement, so you may well end up paying more than the market price for your asset in the long term. If you can cope with the higher cost, this is fine, but bear in mind that buying outright may have offered greater value.

Con: You may lose the use of the asset

If you can’t keep up your lease payments (due to poor cashflow for example) then the owner of the lease agreement may recall the asset. If this item is crucial to your business model, losing this key asset can have a profound impact on your ability to operate. In this respect, leasing is a more risky prospect, but also an easier option for businesses with less cash to splash.

How First Class Accounts Ovens & Murray can help

Our management accounting services ensure you have timely and accurate financial reports to make informed decisions about leasing versus buying. We can also help you understand your financials, so you can understand if you can meet your financial obligations

How to make the best choice for your business

Deciding whether to buy or lease your equipment isn’t always straightforward. It depends on factors like your financial situation, cash flow, and long-term business goals.

We offer a comprehensive cashflow forecasting and management accounting services to provide you with an accurate picture of your financial future. By implementing the appropriate apps, and with our support, you can review your current financial position, assess your cash flow, and look at your regular costs to help you decide whether buying or leasing is the right thing for the business.

Talk to us about whether buying or leasing is the best way forward.

Key ways to get more from your forecasting

Key ways to get more from your forecasting

Key ways to get more from your forecasting

During challenging times, many businesses see income either disappear completely or drop to dangerous levels.

To be able to navigate the future path of your cashflow, you need to start forecasting, so you can map out your financial position over the coming months and can take the appropriate action to safeguard your cash position.

At First Class Accounts Ovens and Murray, we understand the importance of proactive cashflow management. Our team helps businesses like yours implement effective forecasting tools, ensuring you can monitor your cash position with ease and take timely action when needed.

Forecasting your future cash pipeline

Having access to detailed forecasts helps you to scenario-plan, search for cost-savings and look for strategies that will preserve your cashflow position.

Remaining in control of the cash coming into (and going out of) the business is the real focus, so you can accurately predict your financial position and can resolve any issues.

Our team provides customised forecasting services, allowing you to see the full picture of your cashflow pipeline. We help you stay in control, so you can confidently manage both the inflow and outflow of cash.

Key ways to get more from your forecasting

Run regular forecasts

The financial landscape is changing on a daily basis at present. A cashflow forecast is not a document that remains static. Variables and external drivers are literally changing each day, so it’s vital that you run frequent forecasts and react swiftly to any projected cash issues as they become apparent.

Use the latest cashflow forecasting apps 

Cashflow forecasting apps, like Futrli, integrate with your Xero accounts, giving a drilled-down view of how your cash inflows and outflows will pan out over the coming months – information that will inform and justify the decisions you make during these extremely challenging times.

At First Class Accounts Ovens and Murray, we specialise in integrating the latest forecasting tools with your accounting software. Our team can show you how to use apps like Futrli to get detailed insights into your cashflow, so you can make informed decisions based on real-time data

Explore the right revenue streams

Most sectors will have seen their face-to-face sales drop to absolute zero since quarantine restrictions came into place. To overcome this, there’s a real imperative to explore revenue streams and new opportunities for income. An example of this is coffee shops that now sell roasted beans online (this will depend on lockdown restrictions). The idea is to find ways to increase the money that’s coming in the door and balance out your unavoidable expenses.

Get proactive with cost-cutting

If you can reduce cash outflows to a minimum, that will have a real impact on the health of your future cashflow. Pare back your operations and aim to reduce things like unnecessary software subscriptions, or over-ordering of basic supplies. Negotiating cheaper rates with suppliers, if possible, will also help.

Review your staffing needs

Now’s not the time to make anyone redundant, but you can look at ways to reduce the costs of staffing and resourcing. Reducing working hours or redeploying staff in different roles are all options that reduce payroll costs, while also looking after your staff’s welfare.

Run a variety of scenarios

Changing the financial drivers in your forecast model allows you to scenario-plan different strategies and options. Many of these will be in a long-term plan when restrictions ease. Scenario-planning lets you answer questions and will give you some hard evidence on which to base your decision-making and strategic outlook over the coming months.

Look at various ways to access funding

If forecasts show a giant cashflow hole coming up, you’re going to need additional funding to get through this crisis. We can assist your business to investigate funding opportunities from grants, banks, loan providers, alternative lenders and crowd-sourcing funders.

Forecasting is an important step to give you the business intelligence to support your decision making. 

By working with First Class Accounts Ovens and Murray, you’ll have the tools, insights, and ongoing support to ensure your cashflow forecasts are accurate and responsive to your needs.

Talk to us about setting up cashflow forecasting today. We’re here to help you stay in control of your financial future. Get in touch today.

The Importance of Reviewing Your Financial Reports

The Importance of Reviewing Your Financial Reports

The Importance of Reviewing Your Financial Reports

Understanding your financial reports is essential for the health and success of your business.

At First Class Accounts Ovens and Murray, we believe that taking the time to review these reports regularly is a key part of effective business management. 

Whether you’re managing your finances yourself or working with a bookkeeper, here’s why you should make financial reports a priority.

1. Profit and Loss Report (P&L): Understanding Your Business’s Performance

The Profit and Loss report provides a detailed overview of your business’s financial performance over a specific period. It shows your revenue minus expenses, giving you a clear picture of your profitability.

Why It’s Important:
Regularly reviewing your P&L allows you to monitor your business’s financial health month by month. It helps you understand what drives your profits and highlights areas that may need attention.

Comparing different periods can reveal trends and pinpoint any anomalies, ensuring that you stay on top of your financial situation.

2. Balance Sheet: Assessing Your Financial Position

The Balance Sheet is a snapshot of your business’s financial position at a given point in time. It details your Assets, Liabilities, and Equity, providing insight into what your business owns and owes.

Why It’s Important:
Your Balance Sheet, when reviewed alongside your P&L, offers a comprehensive view of your financial standing. This report is crucial when applying for loans or assessing the overall health of your business.

Working with a bookkeeper can help ensure that you fully understand your Balance Sheet, allowing you to make informed financial decisions.

3. Accounts Receivable Ageing Report: Managing Your Invoices

The Accounts Receivable Ageing Report shows how much money is owed to your business, broken down by how overdue these payments are. It’s an essential tool for managing your incoming cash flow.

Why It’s Important:
By staying on top of your receivables, you can ensure that overdue accounts are followed up promptly, reducing the risk of bad debts. This report is vital for maintaining a steady cash flow, which is the lifeblood of any business.

4. Accounts Payable Ageing Report: Keeping Track of What You Owe

The Accounts Payable Ageing Report details the money your business owes to suppliers, segmented by how overdue the payments are. This report helps you manage your outgoing cash flow.

Why It’s Important:
Maintaining good relationships with your suppliers is crucial, and timely payments are a big part of that. Reviewing your Aged Payables ensures that you meet your obligations on time, preserving those essential business relationships.

 A bookkeeper can help you keep your Accounts Payable organised and up to date.

5. Cash Flow Management: Ensuring Financial Stability

Effective cash flow management relies on a clear understanding of both your Accounts Receivable and Payable. Together with your P&L and Balance Sheet, these reports help you plan for the future and avoid financial pitfalls.

Why It’s Important:
Knowing when money is coming in and going out allows you to plan better, ensuring that your business has the funds it needs when it needs them. This level of financial awareness is crucial for sustaining operations and pursuing growth opportunities.

Your bookkeeper can assist in creating cash flow forecasts that align with your business goals.

6. Informed Decision Making: Empowering Your Business

Your financial reports collectively tell the story of your business. Understanding this story empowers you to make decisions that positively impact your profitability and long-term viability.

Why It’s Important:
The better you understand your financial reports, the more confident you’ll be in making strategic decisions. Whether it’s cutting costs, investing in new opportunities, or planning for growth, having accurate financial data at your fingertips is essential.

Partner with First Class Accounts Ovens and Murray

At First Class Accounts Ovens and Murray, we’re here to help you make sense of your financial reports. Whether you need help understanding your P&L, Balance Sheet, or cash flow, our experienced bookkeepers are ready to assist.

We’ll work with you to ensure that your financial records are accurate and up to date, giving you the confidence to make informed business decisions. Get in touch.

Following Up Invoices in a Challenging Economy

Following Up Invoices in a Challenging Economy

Following Up Invoices in a Challenging Economy

In times when the economy is down, it can feel particularly challenging to chase up payment of invoices. Yet, keeping cash flowing into your business is crucial to cover expenses and meet your obligations to others. 

While the task might seem daunting, maintaining a steady cash flow is essential to your business's survival and growth. 

As with all dealings in difficult times, a combination of empathy and open communication can significantly improve your chances of receiving timely payments without damaging customer relationships.

The following tips are useful to keep in mind when asking for payment. 

The Importance of Personalised Communication

Connecting with your customers is important. Try to make it personal to their situation rather than a one-size-fits-all email. Connecting on a more personal level shows you value them and are conscious of the impacts that the current situation may be having on them. The empathy you show now will also be remembered when the economy recovers. Be proactive—early communication will help you stay on top of cash flow and will also alert you if you need to account for late payments.

When reaching out, consider multiple communication channels. A phone call or video chat might be more effective than an email for some clients, as it allows for a real-time conversation where issues can be resolved quickly. This also helps build a stronger relationship, as it shows you're willing to take the time to discuss their concerns.

Offering Flexible Payment Options

For customers who can’t pay in full, consider breaking invoices into multiple payments with payment terms moved to a longer timeframe. Set up a credit card facility to give customers other options for payment. After all, the easier you can make it for them to pay you, the quicker you will get paid. If you don’t have payment services set up in your accounting software, we can help you do this. Offering a discount for early payment might provide the incentive for customers who can settle to pay your invoice before others.

In addition to these options, consider setting up automatic payment plans. By allowing customers to pay in smaller, manageable amounts on a regular schedule, you can ensure a more consistent cash flow. This is especially useful for customers facing temporary financial difficulties, as it spreads out the payment burden and makes it easier for them to meet their obligations.

Monitoring Total Outstanding Invoices

Make sure you keep track of how much customers are in arrears. While you can continue to allow credit, you want to make sure you're not creating too much risk. Allowing continual extensions to payment while also letting more to be added to their total amount outstanding can create a cash flow crunch. 

Regularly reviewing your accounts receivable is crucial. By keeping a close eye on which customers are consistently late, you can take early action to address potential issues. Implementing credit limits or requiring partial payment before extending further credit are strategies that can help protect your business from excessive risk.

Get in touch if you want help to better track your cash flow.

Using Automated Reminders

One of the most effective ways to ensure timely payments is by incorporating automated reminders into your accounting software. Automated reminders are a powerful tool that can save you time and ensure that no invoice is forgotten. These reminders can be set to notify customers of upcoming due dates, as well as follow up on overdue payments without you having to remember each one.

Automated reminders can be customised to fit the tone and style of your business, ensuring that they maintain a personal touch. This automation not only helps in keeping the process consistent but also reduces the likelihood of late payments, as it keeps your invoice at the top of the customer's mind. 

If you haven’t yet implemented automated reminders, this could be a valuable addition to your current invoicing process. Our team at First Class Accounts Ovens & Murray can assist you in integrating this feature into your existing accounting software, ensuring you have all the tools you need to manage your accounts efficiently.

Consider a Bill Chaser Service

Managing overdue invoices can be time-consuming and stressful, especially when you're also trying to run your business. That’s where our Bill Chaser service comes in. Designed to take the hassle out of following up on unpaid invoices, this service allows you to focus on what you do best while we handle the rest.

Using our service can help you maintain a professional distance, which is sometimes necessary when dealing with late payments. This can preserve your relationship with the customer, as they may find it easier to discuss payment difficulties with a third party.

Keeping Your Business Financially Healthy

Keeping cash flow going is vital for your business, so the earlier you communicate with customers, the better. 

By being proactive, offering flexible payment options, using automated reminders, and considering services like our Bill Chaser, you can significantly improve your chances of receiving payments on time. Don’t let unpaid invoices become a burden—take steps today to secure your business’s financial health - Contact us.

Collect your debtors faster

Collect your debtors faster

Collect your debtors faster

Managing cash flow effectively is crucial for the sustainability of any business. A significant component of this involves managing debtors efficiently to ensure that cash inflows occur on time. However, it's important to remember that even uncollected sales impact your financial obligations.

Did you know that you still have to pay tax on your debtors, even if you haven’t collected them yet? This happens because your tax obligations are calculated based on your sales figures, not just the cash you have received.

Why It's Critical to Collect Debtors Promptly

When your cash is tied up in uncollected invoices, it restricts your ability to reinvest in your business, pay your bills on time, or even meet your payroll obligations. This can hamper your business's growth and potentially lead to financial difficulties.

Therefore, collecting debtors promptly should be a top priority.

How to collect your debtors faster

Agree on Payment Terms at the Time of Sale

Clear communication about payment terms sets the stage for all future interactions with your customers regarding payments.


Ensure Your Customer Signs Your Terms of Trade Before You Start the Job

This formal agreement protects you legally and ensures that both parties understand the financial obligations involved.

Include a Guarantee in Your Payment Terms

This adds an extra layer of assurance that you will be paid, encouraging prompt payment.

Invoice as Quickly as You Can

The sooner you send out an invoice, the sooner you can expect to be paid.

Ask for a Deposit Prior to Starting the Job

This not only secures a portion of your payment upfront but also commits the customer financially to the project.

Change Your Payment Terms to Within 7 Days of Invoice or On Delivery

Shortening the payment period accelerates your cash inflows.

Send Statements Religiously at the Start of the Month

Regular updates remind your customers of their dues and prevent overdue payments from being overlooked. Implementing automated reminders through your cloud accounting system, such as Xero, can encourage late payers to pay on time. 

Have Someone Other Than the Owner Be Responsible for Collection of Debtors

This can often lead to more systematic follow-up and less personal conflict.

Document Any Changes to Your Standard Payment Terms in Writing

Keeping a written record of all terms and agreements avoids misunderstandings and provides legal backing.

Use an Integrated Payment Gateway App

This technology simplifies the payment process for your customers, making it easier and faster for you to collect your money.

Don’t Provide Credit to Customers Who’ve Been Late Payers in the Past, and Don’t Offer More Credit to Customers with Outstanding Payments

This policy helps mitigate risk and improve your cash flow.

Proactive management is key

Don’t procrastinate on your debtors. Establishing clear, firm payment terms and ensuring you stick to them is vital. Remember, it’s often the proactive, attentive businesses that manage their cash flow most effectively.

"It’s the squeaky wheel that gets the oil." – Anon

Don’t let your business be slowed down by late payments. Be the squeaky wheel, take action today. We can help.

Keeping debt low through proactive credit control

Keeping debt low

Keeping debt low through proactive credit control. 

Having a large amount of debt in your business is bad for cashflow, weakens your overall financial health and brings down your credit score as a business.

So when customers don’t pay on time, that ‘aged debt’ is bad news for your finances. Aged debt can begin to stack up, adding to your liabilities and reducing the health of your overall balance sheet.

The good news is that there are ways to tackle late payment head-on.

Get effective with your credit control

Being proactive with your credit control procedures and debt management helps you speed up payment, reduce your debtor days and rein in your overall debt as a business

To improve the efficiency of your credit control, these strategies help speed up payment processes, reduce debtor days, and maintain a healthier financial status for your business.

Make your payment terms clear

The foundation of effective credit control is clear communication about payment terms. Ensure that your payment conditions are explicitly stated on all invoices. Additionally, incorporate a detailed credit control policy into the terms and conditions your customers agree to. This clarity helps prevent misunderstandings and sets clear expectations from the start.

Run regular debtor reports

Regular reviews of your debtor situation are vital. Run frequent reports to identify which invoices are overdue and which customers are consistently late in payments. Understanding the pattern of late payments allows you to prioritise debt collection efforts effectively.

Be proactive in chasing late payment

Being passive about debt collection is a common pitfall, however it's important to not be shy about asking a customer to pay their bill. Adopt a proactive approach by regularly contacting customers with overdue payments. Set up reminders for yourself to chase late payments, ensuring you are persistent but respectful in your communication.

Automate your credit control tasks 

Technology can significantly streamline your credit control processes. Many cloud accounting platforms offer built-in tools or integrations specifically designed for automated credit control. These systems can automatically send reminders to customers as soon as an invoice becomes overdue, reducing the manual effort required and ensuring timely follow-ups.

Leveraging technology for better credit control

The use of technology in managing credit control cannot be overstated. Automated systems not only save time but also reduce the chance of errors and omissions that can occur with manual processes. These tools ensure that all customers receive consistent communication and that no overdue invoice slips through the cracks.

If late payment and aged debt is weighing heavily on your balance sheet, we’ll help you implement the appropriate apps that support the automated systems, debtor reports and credit control processes needed to reduce debt.

Get in touch to improve your credit control.

5 ways to increase profit and improve cashflow

Profit Vs Cash

5 ways to increase profit and improve cashflow

The dual goals of increasing profit and improving cash flow are usually at the forefront of every entrepreneur's mind, as both are essential for sustaining and growing your business. 

However, the path to profitability and strong cashflow is not always straight forward. 

Here, we explore 5 ways to increase profit and improve cashflow, offering actionable strategies that can improve the financial health of your business.

These insights are particularly beneficial for businesses navigating the complexities of the current economic landscape.

1. Sales

Profit increases when you increase sales; cash increases when you collect the money from customers. To increase both your profit and cash from sales:

  • Delight your customers
  • Generate more leads and referrals
  • Convert a higher number of quotes or proposals
  • Increase transaction frequency
  • Increase transaction value
2. Invoicing

Profit increases when you send an invoice to a customer; cash increases when you collect the invoiced amount. To increase both your profit and cash:

  • Set clear Terms of Trade
  • Offer a small discount for early payment
  • Agree the price in advance
  • Stick to your payment terms
  • Don’t do work for people who have overdue payments
3. Margins

Increasing your margins will increase your profit; collecting the increased margin will increase your cash. To increase both your profit and cash:

  • Increase your prices
  • Invoice faster
  • Negotiate better payment terms with suppliers
  • Reduce errors and rework
  • Train and empower your team
  • Increase your efficiency
4. Financing

Reduce your finance costs to increase your profit; borrow money for assets to increase your cash. To increase your profit and cash through financing:

  • Spread the costs of assets over 3-5 years instead of buying them outright (e.g. vehicles)
  • Borrow from a bank instead of a finance company
  • Secure the asset purchases over ‘bricks and mortar’ (if possible)
5. Overheads

Reducing your overheads will increase both your profit and cash. To reduce your overheads:

  • Negotiate with suppliers
  • Measure your return on your spend (e.g. advertising, accounting fees, etc.)
  • Review your subscriptions
  • Go paperless

This is not an exhaustive list of ways to increase your profit and cash. We can help you identify specific areas of improvement in your business to increase both profit and cash. Contact us to find out how

"Never take your eyes off the cashflow because it’s the lifeblood of the business."

Sir Richard Branson

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Implementing these strategies requires a meticulous approach and an understanding of your unique business context.

At First Class Accounts Ovens & Murray and Busy01 Consulting, we provide bookkeeping and business consulting services that are tailored to your specific needs. We can identify areas of potential financial improvement and help you implement strategic solutions to enhance both profit and cash flow.

Don’t let the complexities of financial management hold your business back. Contact us today to learn how we can assist you implement these 5 ways to increase profit and improve cashflow.