Cash is king, we all know that, and in these uncertain economic times, the management of cash flow becomes even more critical. Cash inflow in particular is the lifeblood of businesses of all sizes and niches, with funds from customers, loans, investments and interest on savings all helping companies grow from strength to strength. With Brexit negotiations still underway, preparing for the worst has become a tack taken by many.
Refining how your business manages its cash flow takes organisation and planning, and will certainly stand you in good stead for whatever our impending departure from the European Union (EU) could bring. Our accounting team shares their top tips for managing cash flow positively.
Improve invoicing processes
Going back to basics and improving how your business invoices could provide the solution you need to keep cash flowing as it should be in your company. Invoices should be as clear and concise as possible to ensure your customers or clients have everything they need to pay on time, every time. As well as the invoice number, client name and address, and a detailed description of what’s being invoiced for, include clear payment terms that have been agreed in advance.
In addition to delivering a professional and precise invoice, always send your invoice as soon as work is complete or goods received. Clients who are issued invoices more promptly generally pay quicker.
Make payment quick and easy
Giving your clients more ways to pay is also recommended. Don’t presume your clients will want to pay by bank transfer or cheque. The latest accounting software ensures payment can be completed in just a few clicks. Once clients hit the ‘Pay Now’ button they’ll be greeted by various payment methods, including credit and debit card, PayPal, bank transfer, Apple Pay and Google Pay.
Chase outstanding payments
Don’t be shy about reminding your clients to pay. Poor cash flow is one of the main reasons why 30% of new businesses fail in their first two years of trading. Chasing outstanding debts should therefore be an important part of your operations.
If payment doesn’t arrive on time, send out a late payment notice. Don’t leave debts to age before beginning the collection process, instead catch credit issues early and take action.
Set realistic cash flow targets
Targets aren’t just useful to sales teams. Targets keep cash flowing within your business. Many accounting software products provide the real time information businesses need to set realistic cash flow targets. Use this information wisely to make decisions about your business’ next steps. Keeping your books accurate and up-to-date will also aid this process and ensure the financial state of your company can be viewed at a glance.
Need help maintaining a healthy cash flow? Let us look after your financial future. Contact our team today to discuss your requirements.