SubscribeBookkeeping – 10 Tips To Manage Your Cash Flow
The importance of Book keeping: Here’s 10 Tips to help small businesses in and around Ormeau, Yatala, Coomera, Eagleby and Beenleigh, South Brisbane, Australia, to manage your cash flow
Bookeeping is an important part of any small business
Bookeeping is an important part of any small business – whilst it is historical, in recording past transactions of money coming into and going out of your business, book-keeping can also help with managing the cash flow of your business
Whilst world leaders have a money-tree policy to create cash, the average small business owner has limited opportunities when cash flow gets very tight, as in the present economy.
Contractors in the building industry can quickly run up large accounts with builders and developers, and forget that even large companies can fall over in a recession.
On Australia’s Gold Coast a large property developer has collapsed with millions of dollars debt, and often the sole tradesman or small business owner is at the bottom of the food chain, even though they are the ones that need the cash the most, not the Banks or Finance Companies
Our bookkeeping team of mobile freelance bookkeeprs have put together ten tips to help you manage your cash flow:
1. As bookkeepers, we’re amazed by businesses that issue invoices with no specific payment date or credit terms. There’s nothing wrong in specifying the date on which you expect payment – after all, don’t the utility companies do just that on the invoices they send you?
2. Why not issue the invoice the day that you provide the goods / services, rather than waiting until the end of the week, fortnight, or month? Some business owners choose to issue their invoices monthly, knowing their creditors only issue payments monthly
3. There’s been a recent trend, again with utility companies, to offer an incentive to pay early, such as giving a discount. Notice that in reality they are adding a penalty for late payment rather than a discount
4. Ask your customer for a deposit in advance, particularly if they are requesting a high ticket item that you have to purchase from your supplier before receiving payment from your customer
5. If you find that you have customers that are regularly late in payment, offer them a discount if they pay by credit card
6. Control the stock in hand. We’ve all seen carpet retailers making outrageous claims that they’ve ordered too much stock and just HAVE to sell it quickly this week at ridiculously marked down prices. It may be an effective marketing ploy for them, but if they really ran their business by constantly over-stocking, how long would they really survive?
7. Small business owners can find it beneficial to make part payments regularly on larger invoices, rather than waiting to pay a huge account in one large lump sum. By managing your invoices can you keep a tighter control on your cash flow
8. Ensure that you bank your cheques/ cash regularly rather than doing the banking once a fortnight/monthly – By ensuring you have regularly payments coming in to your business, you’ll be better able to pay bills as they come in
9. When cash flow gets tight in the business, have a look at how much money you really need to be drawing out as wages for yourself
10. Have a review of your expenses in running your business and see where you can make savings straight away. We’re seeing this with department stores that have seen in a drop in sales, yet they’ve managed to maintain their profits. How are they doing that? Cutting staff levels and making the remaining staff work more efficiently
Larger companies paying experts huge consultancy fees to examine ways to reduce overheads and increase profits are using many of these tips. You can follow what they are doing and implement many of those practices in your own business.
When you see a change in behaviour and/ or management of the departments stores and utility companies, just pause to think for a moment how you apply those same changes in the operation of your business
If you have no cash-flow strategy in place, then contact us now, so we can get together and help you
