Managing your cashflow is an integral part of keeping your company afloat. In a business environment where cash is still king, making sure you have the cash to fund your business prospects is the number one way to ensure that your company has a future. Unfortunately, keeping a steady cashflow can be much harder than it sounds, especially when you’re struggling with customers who can’t (or simply won’t) pay on time. If you’re struggling to keep your cash flowing, here are 5 top tips that may help.
Be prompt with your invoices
Your customers aren’t going to chase you for invoices. If you don’t send your invoices out on time you won’t get paid on time, and that’s nobody’s fault buy your own. There’s a couple of reasons that you need to be prompt about these invoices – not only because you inevitably get paid sooner, but it helps avoid confusion further down the line, with clients and customers querying whether or not they have already paid for services requested months ago. Given how long certain customers and clients can take to pay, the sooner you ask, the sooner you get!
Review your customer payment models
Depending on how your company is set up you may take full payment in advance, at the end of a project, or anywhere in-between. Depending on the scale of your project, this may lead to you taking on unnecessary risk, leaving you high and dry should the project go south. Review your payment models, aiming for regular, monthly payments where possible, and a deposit up front where it’s not.
Make it easier for your customers to pay
The easier is for your customers to pay, the less excuses they have for not doing so. If you only take payment in the form of a banker’s cheque, it stands to reason your cashflow is going to be held up. While this is an extreme example, it certainly highlights the point. Open up the way you allow your customers to pay, from the standard telephone/credit card payments to the new and modern online payment systems like EcoPayz. This really is an area where the old adage ‘the more the merrier’ certainly rings true!
Get your tax receipts in early
Depending on where your business is registered you’re going to have a slightly different tax year to the next company. As a result, the only rule of thumb you can go by is that getting your tax receipts to your accountant as early as possible saves you a massive headache at the end of the year. This way you’ll know how much to pay the tax man and when, helping you avoid a larger bill than you may expect! The same is true for your bills and invoices from your suppliers – timely payments makes for smoother cashflow, better working relationships and, if you’re lucky, discounts further down the line.
Remember that forecasts change
No matter how much you stay on top of your paperwork and your cashflow, it’s important to realise that your business forecasts can change. Suppliers can go bust, clients can pull out in the middle of a project and economies can tank at the turn of a political dime. The real test is whether or not you can manage your cash flow during these troubled times and still come out on top. Remember to keep enough cash free for a rainy day – if you’re looking to expand your business, make sure you have enough cash to keep your business running normally during the process. Regular forecasts can help your business adapt when it needs to, allowing for smooth sailing during the rest of the year.