Keeping on top of the financial management of your business can be really difficult. Successful cash flow management is a key element to running a successful business and tackling cash flow problems head on is crucial.

It’s possible to have a profitable business struggling to manage cash flow and fund growth, or a loss making business with positive cash flow, particularly if you are scaling. 

Turning a profit is critical to running a successful business BUT without planned and predictable cash flow, it will be challenging to pay staff wages and essential overheads, purchase stock and run day to day operation, let alone grow your business.

Cashflow keeps the business functioning – A strong revenue stream serves to bring cash into the business. Without cash to cover the costs you have no means to keep the wheels turning. Cash is King! 

Cash Flow Management Tips

  • Track Revenue and Expenses – In an ideal situation, cash inflow is greater than cash outflow. It’s crucial to track expenses, when they are due and manage them carefully. Invest time in analysing your historical cash flow to identify trends and prepare a cash flow forecast to help you plan for the future.
  • Manage Your Costs – Be Proactive – Taking action to reduce your spending will have a positive impact on your cash flow. Cut unnecessary spend, use different suppliers, negotiate prices and bring your base price down. 
  • Stay on top of invoicing – Ensure your invoices are raised as soon as work has been completed / items sold, to ensure there is no delay in cash hitting the bank!
  • Get Paid on Time – Late payment is often the main cause of cash flow problems and can cripple your business – Offer customers easy ways to pay, such as Direct Debit and employ a rigorous credit control process to chase customers as soon as the payment date has been missed. 
  • Seek to Increase Revenue – Drive sales and marketing activity – increasing revenue will aid your cash flow position. It’s crucial to be proactive and focus on marketing activities to bring new business in.
  • Watch Your Profit Margins – Review Existing Prices – Price increases can be a daunting prospect for fear of losing existing customers, but should be part of a wider cash flow strategy to ensure profit margins are maintained.

If you can keep the cash flowing then the profits take care of themselves. Ensuring a positive cashflow will give the company a solid financial foundation – If cash is available the business can grow. 

Come and talk to us about improving your cash flow management – We can delve into your finances and help you plan, predict and prepare.