Boost Your Cashflow
A good positive cashflow is important & especially essential in the current economic climate, cashflow management really helps. It is planning & keeping your eye on the ball; you can do this yourself or let us help.
What should you do?
Create a cashflow forecast
It is predicting how much money you expect to receive minus the amount expect to pay out.
Start with your current income & expenditure, review expected future income & payments, input the numbers into a spreadsheet, look at the difference between money in & money out. If more is coming in than going out, this is a good start.
A cashflow forecast is useful to plan expenses & strategise your business. If you plan to grow the business, you need to plan & implement a marketing strategy, you also need to know how money you need.
Regularly Analyse Cashflow
Once you’ve done a cashflow forecast, don’t stop there, continue reviewing income against payments due on an ongoing basis, so you can adjust your cashflow accordingly.
Review what’s working & what is not. Look at what expenses can be reduced or cut out & how the business can get more money in.
Implement an efficient invoice system
An efficient invoice system, to ensure invoices are raised when they should be, along with sending regularly reminders for payment will make a big difference. Automate as much as possible, there are many software options to help you.
Negotiate better payment terms with your suppliers
Check with your main suppliers if your current payment terms could be improved. If you don’t ask, you don’t get.
Make It easy for your clients to pay you
Automate your payment systems & make it easy for your clients to pay you; offer more than one payment option.
Look at different financing options like Invoice financing or discounting
Invoice financing is where an invoice financing company takes over your unpaid invoices & pays you a big percentage of the value of your invoices quickly, they often take on payment collection of invoices for you.
Invoice discounting is using your unpaid invoices as security for a loan.
These can be expensive but useful when cash is tight or as an alternative to a bank overdraft.
Use all available concessions like cash accounting for VAT & Gross CIS in Construction
Businesses who turnover £1.35M or less can use cash accounting for VAT. This means that you only pay the VAT when you get paid, this can boast to your cashflow bearing in mind that VAT is 20% of your invoice value.
If you are in construction apply for gross status, this means that your Contractors will not have deduct any CIS from you, which is normally 20% of the value labour in your invoice.
Build up an emergency fund for your business
Its sensible to set aside funds to cover unexpected business expenses, make sure you have easy to access the money.
If you find this interesting or helpful, why not book a meeting to see how we can help you?
