5 winning strategies to improve small business cash flow

5 winning strategies to improve small business cash flow

About half a million small businesses are
launched in Australia each year. Of those, just over half fail within four years. And
one of the big challenges for small business is cash flow. Getting the money you’ve earned flowing
in to meet your outgoing costs is critical if you want your business to stay afloat. So here are 5 strategies to help ensure you
don’t land in a cash flow crisis that could cost you your business dream In order to get paid on time, it’s absolutely
crucial to have a system in place that makes it easy for your customers to pay you. This can be as simple as making new customers
aware of your payment terms. If you need to be paid within 14 days to keep ticking along,
let your customer know from the outset. Also check that your invoicing system makes
payment terms clear and lets your customer know how to pay you. For example, make sure
you include bank account details or other payment options. Tools likeInvoice2Go for example integrate
with payment platforms that allow customers to pay with credit cards or via services like
Paypal. Once an invoice is sent, make sure you can
easily check when it’s overdue and send reminders when a payment isn’t received. Most businesses go through highs and lows.
Some months can be particularly lucrative while others are more challenging. Check back through your sales and expense
history and look for patterns. For example, you may find that there are specific times
of the year when cash flow becomes tighter. That might be related to the weather, ongoing overheads, the end of financial year or some other factor. Once you understand what times of the year
are your most lucrative and expensive, you can plan to set aside money so you’re not
caught short during the tighter months. Forecasting involves both planning and reviewing.
So set time every month in your calendar to revise your forecasts for income and expenses
so that you know what’s coming. There are 6 key indicators that a business may need funding: The growing pains that come with expansion If you’re turning away new business When current funding reaches its limit If your business isn’t able to meet commitments
– from putting aside funds for BAS to delivering promised stock levels Slow paying debtors and the flow-on effect
that creates And business owners using personal funds Financing can take many different forms. There are short-term options such as overdrafts
and credit cards, but high interest rates and fees can make monthly repayments significant. Small businesses have traditionally found
it challenging to secure funding through established lenders such as banks. That’s changing with the rise of alternative
lenders like Capify that provide quick access to funds so the business can capitalise on
opportunities to grow. As always, try to consolidate any multiple
debts or existing loans. Weighing up the best option for your business
will depend on your specific situation. That may require getting advice from an expert
into what will work best for you. It can be tempting to stock up on items you
need to run your business when they’re on sale. The trouble is, when you invest in things
like equipment, tech or other inventory, that value is locked into something you may not
be able to use for some time. So, while you may be well-equipped, you don’t have liquid cash. Look, if there’s a special deal available,
perhaps buy an extra month’s supply. But don’t get carried away and purchase a year’s
worth of items. Unexpected expenses can cripple a small business. Western Australia’s Small Business Development
Corporation recommends adding 20% fat to your expense forecast… ….and setting those funds aside, just in
case you’re hit with something left field such as the need to replace a piece of important
equipment, the sudden loss of a key customer or some other unforeseen situation. You can compare business savings accounts
on Finder. Your vision may be the heart of your business
but cash flow is the life blood. Keep reviewing and revising – adjust your
expenses, plan ahead if you need some short term financing, and reconsider how (or even
how much) you invoice customers and track payments. We’ve also made a new video explaining how
your business can take advantage of the Australian government’s $30,000 instant asset tax write-off. Click the link below to watch that and visit
Finder for more guides to start or grow your business.


One thought on “5 winning strategies to improve small business cash flow”

Leave a Reply

Your email address will not be published. Required fields are marked *