Cashflow Archives - Page 5 of 7 - BUSY01 and First Class Accounts Ovens and Murray

Category Archives for "Cashflow"

How do you get your outstanding invoices paid?

How do you get your outstanding invoices paid?

Do you dread following up outstanding invoices?

It can be frustrating when you have customers who haven’t paid their invoices. Not to mention the impact on your cash flow.

Getting paid on time is essential to good cash flow. But how do you get paid?

Here are some simple, effective techniques that can help you get your outstanding invoices paid.

Make sure your terms are clear

Write into your terms of service that you will charge a late fee for overdue invoices. Make sure you your customers are aware of your terms of service before you do the work.

Also, we recommend doing a credit check before you do business with a new customer. This can help reduce the risk of late payments and defaults, as well as minimising the need for follow-ups.

Reminders

Often, the payment is a simple oversight. By resending the invoice or sending a simple payment request an outstanding invoice will be paid. Start there, and you might be surprised by how many outstanding invoices are paid.

Better still, set your accounting software up to send automated reminders to customers with outstanding invoices. Talk to us about how to do this.

If the above action doesn’t achieve the desired result, ie your outstanding invoice being paid, it’s time for firmer action.

As uncomfortable as it can be to make a phone call to ask for payment, it can be one of the most effective ways to get paid. Perhaps start with asking are they aware that their invoice is outstanding.

A stronger stance

So, what do you do if your customers don’t respond to your polite requests?

If you have been waiting for payment for months, it’s time take a stronger stance.

This could include:

  • stopping your services until payment is made
  • using a professional debt collector
  • bringing in your lawyer

While you will likely get paid by taking this stronger stance, you do need to consider the potential impact on the relationship with your client. How important is it? Do you want to continue to do business with them? Is it worthwhile continuing to do business with them? 

If you need help managing your outstanding invoices, get in touch for expert support and guidance.

managing finances in your business

Managing finances in your business

Managing finances in your business

When you are busy running a business getting your head around effective financial management can be difficult.

If you get it wrong you could end up focusing on the wrong things that are detrimental to your business.

As a business owner, there are four basic areas that you need to consider when managing finances in your business:

Have a plan

It’s important to have a plan to you understand your business expenses, project your revenue and be able to track your finances.

Having a plan allows you to track and review your profits and losses, outstanding accounts, payroll expenses and more.

You should review your plan regularly so you have a clear understanding of your business financials and are able to forecast accurately.

We recommend using online software, like Xero. Online software helps you keep accurate and up-to-date records and is a more efficient and time saving way to stay across your financials.

Cash flow

We’ve said it before and we’ll say it again. Cash flow is the lifeblood of business.

By understanding and tracking your incoming and outgoing cash (or cash equivalent), you can gain insight into trends over time. This gives you more understanding of, and therefore control of, your cash flow.

And that means you can use forecasting tools, like Futrli, to identify opportunities to make adjustments to help prevent fluctuations in your cash flow.

Debt

If you have debt associated with your business, and let’s face it – most of us do, it’s essential to keep an eye on it.

Borrowing isn’t necessarily a bad thing, but it’s important to make sure the benefits of going into debt outweigh the costs.

On the flip side, if you’re owed money, it’s vital to closely manage unpaid invoices and secure any money you’re owed in a timely manner. Read more about having a watertight accounts receivable process here.

Growth

Growth is great, but it does need to be manageable.

When you are looking at growing your business or taking on new clients, work out if you manage the additional work and how it will affect your current setup. What additional resources, tools, personnel, financial investment will be required? And (like taking on debt), will the benefits outweigh the costs.

Successful financial management isn’t necessarily about the specific decisions you make. It’s about understanding the impact your decisions will have on your business.

Talk to us about the Apps and tools available to help you manage your business finances.

5 ways to improve your cash flow

5 ways to improve your cash flow

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.

Need help with forecasting or cash flow management? We’re here for you. Feel free to get in touch.

Creating a watertight accounts receivable process

Creating a watertight accounts receivable process

In business, it doesn’t get much more important than making sure your customers pay you.

And accounts receivable is all about getting paid for the work you do – in business.

It’s not exciting, but it’s important.

The accounts receivable process covers every part of your payment lifecycle. From finding customers to communicating expectations to billing correctly to following up on late invoices.

Building an accounts receivable process

So, how do you to build an effective accounts receivable process in your business?

The right customers

First, you need to work with the right customers and clients.

Before taking on customers, make sure you run credit checks. It’s also important to have them sign written terms, including billing timeframes and late payment penalties.

If you are comfortable doing so, you can also ask clients to sign a personal guarantee. This gives you the option of suing for an unpaid debt.

Effective invoicing

It’s vital that you always send invoices straight after the work is completed. This gets the payment ball rolling.

Make it as easy as possible for your customers and clients to pay you. You can do this by offering options like debit, credit or direct debit to.

Dependent on the apps you and your customers use, you may be able to set up to send e-invoices directly to your customer’s accounting or finance software.

Following up

Make sure you keep a close eye on your invoices. Make frequent and regular checks that payment has been made.

Have a process to follow up if an unpaid invoice is past its due date. This can be an automated process using cloud accounting software to send email reminders and statements. If that is unsuccessful included phone calls and consider debt collectors in your process.

Reviewing

For any customers that regularly pay their invoices late, consider changing their terms. Perhaps split your invoices and ask them to pay half upfront. Or suggest another payment method.

If there is not change to their late payments after changing their terms, you might consider letting them go.

Consistency is key

At the end of the day, having a watertight accounts receivable process is all about consistency.

Follow your process every time.

  • Select the right customers
  • Have clear policies and prompt billing
  • Ensure thorough follow-ups and reviews

Automating your process as much as possible ensures consistency. And being consistent in your process reduces the risk of unpaid bills and rogue customers.

If you’re ready to create an effective payment process talk to us about how we can help.

Should I focus on profits or cash flow?

Should I focus on profits or cash flow?

Turning a profit is at the heart of running any successful company. But should profits be the only financial focus if you're looking to create a stable, long-term business?

Cash flow is the beating heart of your business. Without an even and predictable flow of cash into the company, you can't cover your overheads, you can't pay your employees and you can't run your day-to-day operations – let alone think about expanding and growing the business.

So, what’s needed is a healthy cash flow position AND a good focus on driving profits.

Keeping on top of the financial management of your business can be hard work, especially if you’re new to accounting and the technical terms that are used to talk about money.

Understanding your finances

But if you’re going to be in control of your financial destiny, it’s important to get your head around the important process of cash flow management. This is especially true in the current business landscape, where sales revenue may be less buoyant, cash can be tight and the market is going through a challenging time.

Let’s look at some of the key things to understand about your finances:

Profit is a by-product of a successful business

As the owner, you want to make profits, but profitability isn’t the only goal. A business can easily be profitable, but also be highly unstable in the longer term. What you want is stability and consistent revenues.

Cash flow is the blood that keeps your business alive

Good revenues (income) serve to bring cash into the business. Without cash to cover your operating expenses, you have no means to keep the lights on in the business. So cash really is king!

Know your cost base and overheads

The flipside of your cash flow position is your costs. In an ideal world, you want more cash inflows than cash outflows, so it’s important to know your expenses and costs and to manage them carefully.

Be proactive about spend management and easing expenditure

If you can take action that reduces your spending, that is hugely positive for your cash flow position. Choose cheaper suppliers, negotiate better deals and bring that cost base down.

Drive more revenue, through increased sales and marketing activity

If you can increase your revenues, you also boost your cash flow. So it’s important to be proactive about running targeted sales and marketing campaigns to increase your sales.

Keep the cash flowing and the profits take care of themselves

If you achieve the ideal cash flow position, the company sits on solid financial foundations, the cash is there for investment and the business can grow. It’s that simple.

Talk to us about improving your cash flow management

Whether you’re new to running a business, or a seasoned owner who needs some financial support, we can give you the cash flow advice you need.

We’ll review your finances, delve down into your cash flow and will come up with key ways for you to increase your cash income and reduce your cash expenses. It only takes a few small changes to achieve a far better cash flow position for your business – helping you maintain positive cash flow AND generate meaningful profits.

Get in touch to talk through your cash flow concerns.

Cash Flow Management

Why you need to forecast your cash flow

Cash flow is the lifeblood of your business. And when it comes to cash flow management, preventing cash issues is far easier than trying to solve these issues after the event.

Positive cash flow comes from balancing your income (the cash inflows) against your expenditure (the cash outflows). If you’re in control of this then the business will always have the liquid cash needed to cover your liabilities.

Forecasting your cash inflows and outflows

Forecasting works by taking your cash data from prior periods and projecting it forward in time, giving you a ‘crystal ball’ that reveals the future health of your cash flow.

By running detailed cash flow forecasts, it’s possible to:

  • Understand your future operational cash flow – helping you to see the seasonal dips, or the projected drops in income, and get the early warning you need to take action.
  • Plan your costs and expenditure effectively – by working to strict budgets, looking at cost management and reining in expenses – so your future outflows are reduced.
  • Avoid the cash flow issues before they happen – giving you the information you need to plan ahead, take clear action and stay in tight control of your cash status.

Utilising technology to forecast

There are a number of tools you can use to forecast your cashflow, including Add-on Apps. One we often recommend is Futrli. With the ability to connect to Xero and Quickbooks, Futrli can provide integrated forecasting and reporting for small businesses.

Talk to us about setting up cash flow forecasts

If you want to get a grip on cash flow, we’ll help your tailor your accounting set-up and will provide the cash flow forecasting tools you need to reveal your future cash position.

Get in touch and let’s start forecasting.

cash flow vs profitability

Cash flow vs profitability

Cash flow vs profitability.

We all know that understanding cash flow is vital to the success of your business.

And having cash reserves is important to make sure you are never left short at crucial times, such as when wages are due, and when tax and loan repayments needs to be paid. Or, as 2020 has shown us, if the unexpected occurs.

That’s why it’s important to be able to forecast your business’ cashflow.

An accurate cash flow forecast should take into account your business’ current performance across revenue, operating costs, payment habits of both, financing commitments etc.

It should also include what you know about future trends and seasonality.

Cash flow vs Profitability - What’s the difference?

Having positive cash flow is different to being profitable.

Positive cash flow means your revenue comes in on time to pay your expenses and keep you from running out of cash.

Profitability means your revenue is greater than all the expenses required to keep your business generating that revenue.

Basically, timing is the difference between the two.

An example

If you sell $1,000 of goods every month and spend $500 in a month, you will make +$500 profit.

But if you’ve paid your suppliers for the $500 expenditure within the month and fail to collect the cash from the sale of goods within the month you would have -$500 in negative cash flow.

Why it's important to understand the difference between cash flow and profitability

Unfortunately, many businesses fail due to poor customer payment collections, and not understanding the difference between profitability and positive cash flow. 

It’s important not to rely on a profit showing in the Profit and Loss statement, as it is more reflective of positive cash flow than actual profit.

When relying on your bank balance and the P&L to indicate your business performance, you are at huge risk of forgetting all of the items you are responsible for “below the fold” on the Balance Sheet.

Often, the biggest, lumpiest cash out flows that you are responsible for appear there: GST, payroll taxes, loan repayments etc.

This is why it’s important to implement forecasting in your business. A great option to implement forecasting is Futrli. 

Talk to us about how we can help you forecast your business cashflow and profitability.

Coming out stronger

Coming out stronger

Coming Out Stronger

What does the future look like?

2020 and the COVID-19 pandemic has brought significant challenges for many people, including business owners.

While we are starting to see an easing of restrictions and a return to (Covid) normal the impact of these challenges cannot be underestimated.

While we cannot be sure of what’s ahead, it’s important to be looking forward and planning for your future.
If you're a small business owner, you can become more resilient and in control by applying these few strategies.

Coming Out Stronger Strategies

  • If you have been receiving JobKeeper 1.0, forecast your eligibility for JobKeeper 2.0 and 3.0
  • Prepare and maintain a cashflow forecast with and without JobKeeper
  • Know the key dates where Government support changes, reduces, or ceases
  • Prepare a breakeven analysis for various scenarios
  • Regain perspective by booking a meeting with your bookkeeper 
  • Set a regular review meeting to review and interpret your monthly numbers and key indicators
  • Do a check of your first quarter profits and do a forecast of your future profits to work out if any 2021 tax needs to be set aside
  • Document your future plans for your business - immediate exit, gradual exit, continuation, diversifying
  • If you haven’t already done it, get your 2020 Income tax done or scheduled for completion as soon as possible
  • Review your systems and processes to see where improved efficiencies can be made, especially through the introduction of apps that can reduce paperwork (and the time involved) considerably

If you are seeking advice on business Apps, we specialise in understanding the different options for different industries and businesses. We provide you with insights and guidance on what Apps would best suit your business.

Or, if you're interested in any of these measures contact us to discuss how we can help you become more strategic, resilient, and in control.

cutting costs and increasing prices

Cutting costs or increasing your prices

Are you considering cutting costs or increasing your prices?

With more than 85% of SMEs expecting a lower profit in the next nine months, the more prepared you can be for the unexpected, the better.

Managing expenses is a good idea at any stage in your business and you may need to consider increasing your prices.

Smart ways to get your costs under control


Cashflow has been a big issue for thousands of businesses this year, and when the money’s not rolling in, it can help to rethink your costs. To do it effectively involves more than just keeping an eye on outgoings. It’s about looking at all the moving parts of your business to see if your systems (or lack of) are costing you unnecessarily.

Here’s how:

Muck in

Do a cost control audit to work out where your big cost centres are and look at your systems for managing them.

Be aware

Don’t just slash your expenses. Track costs and look out for opportunities to trim fat or take a different approach.

Unite your team

Bring everyone together to monitor and analyse inputs and expenses. Reviewing and developing your systems? Get your team’s feedback.

Look to your peers

How do your costs compare to others? If a business of a similar size and production system to you is performing well, but spending less, explore what they’re doing differently.

Seek advice

Got a good idea of where the issues are, or feeling totally confused? Talk to your advisors about your next steps

How can I put my prices up without losing customers?

If you need to change your pricing to make ends meet, be honest and up-front with your customers at all communication points.

  • Make it clear on your website and social media that prices have changed and why.
  • Send an email to let all your clients and suppliers know about the changes.
  • Meeting people face-to-face? Make sure they’re aware of the price hikes before they’re invoiced - otherwise you could be in breach of the Fair Trading Act.
  • Provide the best customer experience you can by updating staff on any changes and advising them on how to communicate them to customers.
  • Worried you’ll lose fans? Consider staggering price increases of individual products over time.

Talk to us about how we can help you make better business decisions.

1 … 3 4 5 6 7