5 Tips of Keeping a Healthy Cash Flow
If you are a business owner, you would be aware of how vital cash flow is to any successful business. Cash flow is often an ongoing concern that you will need to manage efficiently and strategically. Considering cash flow is the blood of most businesses, it is imperative that you are on your ‘A Game’ when it comes to managing the inflow and outflow of your cash. In this article, we look at how you can stay on top of cash flow in 2019, so read on to find out more!
1. Immediate Invoicing
According to experts in accounting software in the UK, one of the best ways to stay on top of your cash flow game is to make a habit of immediate invoicing. The idea behind this is simple; the faster you send invoices out, the faster you get paid. The faster you get paid, the higher chance of keeping your cash flow afloat. Chances are, the earlier you invoice, the lower the chances of customers finding fault with your fees or forgetting about those extra services you provided them. Avoid any arguments that will delay payment by invoicing immediately, and you’ve solved both cash flow issues and customer relation issues.
2. Adjust Your Spending
Just like your personal bank account, it is important that you adjust your spending in accordance with the highs and lows of your business. Instead of blowing all your money on items, materials or machinery when your cash flow is low is a definite way of doing your business harm. It is advised that you plan your year out early on, and identify periods in which cash seems to be tight. Based off this forecast, you can then decide when is the best time to be spending money, and when it would be wise to be a little more frugal with spending. Working with the ebb and flow of your cash flow instead of against it will prevent your business from suffering in the long run.
3. Secure Your Deposits
It can be tempting to please your clients/customers by not requiring deposits on their business, but doing so can hurt your cash flow in the long run. Getting an upfront deposit from customers, especially new ones, is imperative in helping with your cash flow and reducing future miscommunication about pricing.
Aside from keeping the cash flow afloat, securing a deposit ensures that you are focusing on the right customers instead of wasting your time on customers who may not be serious about your services. Chances are, someone who is intent on using your services will not have issues with an upfront deposit, so you’ll be saving yourself invaluable time whilst maintaining a healthy cash flow.
4. Get Rid Of The Clutter
To maintain healthy cash flow, it is important that you get rid of the clutter. By this, we don’t mean doing a spring clean of the office, but rather, look at the patterns and behaviours of your customers. Are there customers who are constantly paying you late, or vendors who are offering less than satisfactory services?
Late payments affect your cash flow negatively, and if you’re constantly dealing with delayed payments, there is certainly no way you’ll be able to keep the cash flow afloat. Do a spring cleaning of the customers and vendors that no longer serve your business’s needs – focus on the ones who pay you on time, and who are working with you instead of against you.
5. Cut Down On Costs
You’ll be surprised at how much money you’re actually spending unnecessarily. One of the best ways to stay on top of cash flow is to cut down on unnecessary costs. Can you cut down on utility bills? Are you subscribed to services that you no longer need, or insurance policies that no longer serve your needs? Is there any way to renegotiate your lease? All the little things count – so working towards cutting down current expenses where possible is a fantastic way to maintain a healthy cash flow.
We hope that this article has equipped you with some useful methods of staying on top of cash flow in 2019.