"...because it's the lifeblood of your business." (- Richard Branson)
It really is true that cash is king when it comes to the financial management of your business. The delay between the time you receive money from your customers, and the time you need to pay your suppliers is often a problem...but it is not insurmountable!
The first step is cash flow management (encouraging timely payments in and managing payments out).
Next is cash flow forecasting. The most profitable business owners use monthly cash flow projections. This allows them to see trouble before it happens...and plan accordingly.
Improving cash coming in
Here are a few ideas to help you speed up cash collection:
Issue invoices immediately - and follow up if payments are slow coming in
Offer easy, fast ways for your customers to pay (Stripe, Paypal, Direct Debit)
Consider offering incentives to early payers
Ask customers to make deposit payments at the time orders are taken
Do credit checks on all new non-cash customers
Consider a subscription business model
Managing money going out
Here are a few ideas to help you manage your expenses:
Negotiate payment terms that work for you and your supplier
Ensure all of your outgoings are necessary - and regularly look at ways to reduce them.
Don't always focus on the lowest price when choosing suppliers. Sometimes more flexible payment terms can improve your cash flow more than a cheaper price
Cash flow forecasting
Cash flow forecasting is important for all businesses - start-up, SMEs or large enterprises alike. It enables growth and progression...and helps to see and avoid problems that may arise in the future; preventing disaster!
Ask us about our business advisory services - which include regular cash flow forecasting reports and face to face meetings; enabling us to offer useful and realistic advice on managing your cash.