Any business owner will tell you that managing business cashflow can be a real juggling act. Cashflow is one of the most common problems that cause business owners to lose sleep. Gaining control of your small business’ cashflow will go a long way to improving your peace of mind and reducing stress.
So how Can a Business Improve its Cashflow?
Identify
Identifying certain triggers in particular sales and payments will make a significant difference to cashflow management. Analysing outgoing payments and noting when they regularly occur will go a long way to ensure strong cashflow. Some of the key areas to consider are:
- Payroll for staff
- Supplier payment terms and conditions
- Australian Tax Office
- Utilities
- Finance including bank fees and loans
- Rent
- Payment to suppliers
- Customer payments including refund policies
There are number of business costs that must be accounted for to help create better cashflow management for your small business. Becoming aware of business costs and when they are due takes us to the next step…
Awareness
Being aware of every cost to the business goes a long way to helping solve cashflow issues. Knowing the impact of these costs and outgoings will further help understand and improve cashflow management for your business over the course of a month or quarter.
Outgoings that need to be paid weekly, fortnightly, monthly or quarterly can be prioritised or delayed according to payment terms and conditions to improve cashflow. Minimising the incurrence of late fees or interest costs is a priority. Obviously, not meeting terms or paying suppliers late will result in interest payments or penalties being applied – all of which are detrimental to positive cashflow. Being aware of supplier’s terms and conditions and ensuring your organisation’s terms and conditions are robust is critical to business continuity.
Along with these cashflow areas, there are other key triggers including:
- Staff payments, especially with casual and full time workers or during busy trading periods
- Finance costs especially with large payments for equipment
- Outstanding debtors and overdue invoices – Coming to terms with debtors to create agreements can make paying off invoices quicker and easier
- Running accounts receivable reports
Chasing customers for payments adds to the stress when you have expenses to pay. Implementing invoicing systems that are fast, on-time, and automatically follow-up outstanding invoices helps keeps cash flowing.
Tailored systems
Cloud Accounting and applications can assist businesses large and small with their cashflow management. Cloud-based accounting solutions forecast business income and costs better and create a system to trigger key information that helps assess major business decisions such as major purchases or use of finance that impact on cashflow.
New cloud accounting software options such as Xero and QuickBooks Online are powerful applications that automate many business tasks and generate reports quickly, helping you understand your position better. Being securely cloud-based, these cutting-edge systems allow you to access information from anywhere on any device. Accessing real-time financial data gives businesses greater control and allows better business decisions to be made.
If your looking for more information on how to best manage your cashflow check out our blog around 5 tips to improve your cashflow or speak to one of our experts today.
