Positive cash flow (and plenty of it!) is what businesses strive for. It eases the financial pressure and offers up opportunities for growth, research, development and reward. Wouldn’t that be nice?
Yet it seems to be unattainable for so many. It is a fast-moving world. Consumers are picky with high expectations and with the advent of the internet and social media, they are exposed to more purchasing and transaction opportunities than ever before.
Competition is fierce.
The global financial downturn many years ago impacted many businesses. A survey conducted by the Reserve Bank of Australia found that business owner’s perceptions of cash flow challenges married with the economic climate.
All sounds a bit gloomy doesn’t it? But it doesn’t have to be. Increasing your cash flow comes down to simple and effective financial and operating procedures.
A survey conducted by accounting software firm CCH and global information service group Wolters Kluwer found that 31% of small business fail due to insufficient time management of the books!
Now THAT is something that is entirely avoidable with simple, operational processes that you must make part of your business culture and daily goals. Here are three simple ways you can improve your business cash flow:
Invoice at the end of every job
This is an all too common mistake. Don’t wait for the end of the week or worse (!) the end of the month to pump out all your invoices. The sooner an invoice is in a debtor’s hand the sooner you can chase them for payment. I was working with a photographer the other day who had an invoicing app on her phone. She invoiced another client for work that she had done that morning right there and then. Proactive AND punctual, that’s what you want to be with your invoicing.
Use accounting software that tracks invoicing activity
Traditional methods of accounting, especially for small business and start-ups, often mean creating an invoice in a word document and emailing it to a client. Now if you haven’t transferred a record of that activity to say another spreadsheet, you might lose track of who you have sent an invoice to and when.
Cloud accounting software takes this issue away. For example, Xero’s online bookkeeping software can see who sent the invoice and when it was opened. It can also automatically send reminders to your debtor saving you time and getting that money in your bank account where it rightfully belongs, sooner! Ever had someone say to you, “Oh I didn’t receive that email.” Not anymore. You’ll identify the clients who have an affinity for tall tales.
Modernise your payment options
It’s 2019 so if you aren’t working with online accounting software and using payment options that make it EASY for clients to pay you, you need to get with the technological program. With so many options available such as Electronic Funds Transfer, PayPal, eWay and Secure Pay, there really should be no excuse for accepting “The cheque is in the mail” as a justification for why an invoice hasn’t been paid. Traditional methods of payment such as cheques impact your cash flow negatively. Make it easy for clients to pay you and watch your bank balance grow.
Being proactive about cash flow is the key to keeping it positive, from a cash perspective and also a management perspective. Putting your head in the sand and neglecting the books will not work.
Use technology for good, not evil and get the money you deserve. You and your team have worked hard for it. It belongs with you.