Three top tips to help you better manage cash flow in your business
One of the most critical issues for any small business owner is managing cash flow effectively. But, regardless of whether you’re going it alone or have financial backing, creating a stable cash position isn’t always easy.
There are myriad considerations and processes involved in managing cash flow – from mastering payment terms and budgeting to deciphering tax credits. However, in most cases doing it well means focusing on two core goals: regulating income and controlling expenditure.
Here are our three top tips to help you achieve both:
Implement online accounting software
Managing your accounts online can make a real difference in keeping on top of your finances. Most accounting software will give you full visibility of, and real-time access to, your key accounts, invoicing, and customer debts.
With a well-maintained solution you’ll easily be able to get an accurate picture of the flow of money through your business which can help with forward planning, financial reporting and managing debt – key to accurate budgeting.
Today there is a host of choice available when it comes to cloud accounting services, and businesses like Xero, Sage, Intuit and Bokio offer a wide range of packages to suit every size and sector.
Get familiar with Companies House
As helpful as it would be if every customer adhered to payment terms, unfortunately most small business owners will attest that it’s often not the case. And, while everyone would agree chasing debtors certainly isn’t fun, it can also have a serious impact on your cash flow.
Weeding out those potential bad apples even before you start working with them is one way to minimise risk. If your prospect is another business, Companies House can be a goldmine of financial information.
All registered companies must file their accounts with Companies House each year, and while it may not be a silver bullet to avoiding working with a potential debtor, it can at least help you make an informed decision around the level of risk you may be taking on.
Start using subscriptions
Controlling expenditure through sensible and well-considered purchasing decisions is always advisable, but a key factor in managing costs effectively is also avoiding any unexpected expenses.
Having a contract for a service like a mobile phone has been the standard approach in business for years, and we don’t think twice about having a subscription in our home lives. In fact, a survey by TopCashBack.com found more than half (57%) of Brits now have three or more monthly subscriptions.
Taking out subscriptions for basic requirements in a business, such as printers and ink or toner, can be a great option. Not only does it avoid costly one-off payments, it also gives you more visibility of outgoing costs longer term and helps avoid any big surprises.
Find out how our new print subscription service, EcoPro, can help your business.
