Managing Better Cashflow
We all know that cashflow management is vital for a growing business. But where do you start?
Here are six steps to managing better cashflow.
6 steps to managing better cashflow
1. Invoicing
Invoicing is a good place to start your cashflow management.
In other words, invoice your customers as soon as your product is sold or your service is provided. The quicker you invoice, the quicker you should get paid. Also consider asking for a deposit up front – especially if you’re a service provider or your product has a high-end price.
At First Class Accounts Ovens & Murray, we can assist you in setting up efficient invoicing systems that integrate with your existing processes, ensuring timely invoicing and follow-ups on overdue payments. This can greatly enhance your cashflow and reduce delays in receiving payments.
2. Know your numbers
We understand that not everyone is confident with numbers. That doesn’t mean you shouldn’t know your numbers.
Having appropriate accounting software in place, like Xero, will help you always know your cash position. The right software will also help you forecast your cashflow.
Having a good handle on your business numbers will not only help you manage your cashflow, it helps you take advantage of new opportunities.
First Class Accounts Ovens & Murray are certified Xero advisors and can assist you in implementing and managing cloud-based software like Xero or MYOB. This helps keep you on top of your financials, enabling you to forecast and make informed decisions based on real-time data.
3. Keep your numbers current
We mentioned having the appropriate accounting software in place. But that software is only as good as the information you provide it. Keep your information up to date so you know the financial state of your business at any time.
If you don’t have the capacity or capability to manage your accounting software, then outsource to a qualified bookkeeper. First Class Accounts Ovens & Murray provides complete bookkeeping services, so your accounts are always up to date, giving you accurate and timely insights into your cashflow. We also provide cashflow forecasting, helping you avoid potential cash shortages or capitalise on business opportunities.
4. Don’t be a pushover
Make sure your invoices are paid on time and don’t be too lenient with your customers. Keep an eye on your accounts receivable and have an invoicing strategy for any overdue accounts.
You may sometimes need to understand your customers challenges, but that doesn’t mean you should be taken advantage of. Be prepared to act sooner rather than later.
At First Class Accounts Ovens & Murray, we can help you implement an accounts receivable process that keeps overdue invoices under control. For example setting up automated reminders.
5. Save for a rainy day
Sometimes quick access to cash can make or break your business. Saving for the proverbial rainy day (in other words, building a cash reserve) can provide you with that access if unexpected expenses occur. Or an opportunity arises to invest in your business that’s just too good to pass up.
6. Separate business from pleasure
It’s essential that you keep your business and personal finances separate. Especially if you want to know your business numbers so you can manage and forecast your cashflow effectively.
Cashflow is king
Yes, “cashflow is king” is an expression we hear all the time. And there is a reason for that. Managing your cashflow effectively means that your “cash” serves you and helps you build a successful business.
If managing cashflow seems overwhelming or you're struggling to keep up with bookkeeping, First Class Accounts Ovens & Murray can step in to handle the process for you. From invoicing and payroll to forecasting and reporting, we offer tailored services to keep your business on track financially.