Cash flow is king for any business. It allows you to plan your budget and future growth as well as handle day-to-day business fluctuations.<\/p>\n
All companies and businesses will be impacted by cash flow problems at some point. Whether you are a small business or a large company, there will be times when your cash is tied up in either investments, pending payments or salaries. If you are looking to improve your business’ cash flow, here are 7 things you should consider doing;<\/p>\n
\u00a0<\/strong><\/p>\n 1.\u00a0<\/strong>Prepare a Cash Flow Forecast<\/strong><\/p>\n Cash flow forecasting allows you to identify financial cycles and helps predict cash flow levels on a monthly, quarterly and yearly basis. For example, if you have rent, bills, and other recurring expenses to manage, these will obviously impact your cash flow, however they can also be predicted which allows you to budget more effectively for the future.<\/p>\n <\/p>\n 2. Implement Clear Payment Policies<\/strong><\/p>\n Having clear payment policies are not only helpful for you as the business owner, but for the clients using your services also. So making sure your payment terms are outlined and not confusing, will ultimately help you get paid on time.<\/p>\n <\/p>\n 3. Negotiate Extensions With Your Suppliers<\/strong><\/p>\n It\u2019s important when you are using suppliers that you negotiate clear payment terms with them. If you are able to stretch out payment terms to be more favourable to your business, you will allow yourself more time to invoice your own clients and collect receivables before paying vendors – this in turn will help create a steady balance of cash flow.<\/p>\n <\/p>\n 4. Check Your Stock Levels<\/strong><\/p>\n If you are selling products then it is absolutely necessary that your stock levels are checked and updated regularly.<\/p>\n The key here is balance – having too much stock can be a hindrance to your business, as this directly impacts cash flow, whilst on the other hand, having too little stock creates a different type problem whereby you miss out on crucial sales revenue.<\/p>\n <\/p>\n 5. <\/strong>Get Full or Partial Payment Upfront<\/strong><\/p>\n If you are carrying out a large job for a client, it is sensible to ask for a percentage of the total before any work has commenced. This can be done as an insurance that you will be paid for your services, and can help assist in boosting short term cash flow. For example, you may ask clients for a 50% deposit of the total invoice, with the remainder to be paid within 30 days of completion.<\/p>\n <\/p>\n 6. Organised and Functional Invoicing<\/strong><\/p>\n Adopting an efficient and effective invoicing system allows you to automate most of the mundane tasks that come along with invoicing and making payments. Small business accounting software like Xero or MYOB offers the ability to automate the invoicing process, whilst also allowing you to send out automated reminders if customers have overdue invoices. This can save a considerable amount of time, so if you don\u2019t have a thorough system in place it might be worth looking at suitable options for your business.<\/p>\n <\/p>\n 7. Implement Debt Collection Policies<\/strong><\/p>\n Debt collection is a reality for Australian businesses \u2013 whether large or small. And while it\u2019s not something business owners or operators enjoy or want to think about, it is a necessity.<\/p>\n