Whether you’re just starting out or are a seasoned business owner, cash flow is important to keep your business running, but keeping cash flow healthy isn’t always the easiest of tasks. Here are some top tips for improving your cash flow and keeping your company in the black.
1. Have a solid business plan
Your business plan is both the foundation and the roadmap of your business, so make sure it’s done well. Your business plan should feature a cash flow forecast that can help you organise your spending and understand how near or far from your targets you are. A well-drafted business plan is also vital for giving your employees peace of mind, giving them a better understanding of the business’ future and their role in it.
2. Keep a buffer in the business for unexpected costs
A buffer will serve as emergency contingency money for any surprise spending you may need. Some experts suggest having a buffer of 3 months’ money saved for a rainy day. Small businesses without employees like freelance services, may want to save more to guard against the possibility of a few months without a steady flow of clients. As with all circumstances, the more money you have saved, the better, and a business without a buffer is one that is asking for trouble.
3. Use Square to get your card payments the next business day
There’s nothing worse than waiting for payments to come through when your cash flow is in need of a boost. Chasing invoices and waiting for processing can be incredibly stressful, but thanks to Square, every card payment you take will be in your bank account as soon as the next business day, so you can rest assured that you’ll never have to be waiting around for your funds.
4. Use a tool like Xero to manage your accounting and help you keep track of costs
Knowing your funds are coming in is all well and good, but you also need to perfect your bookkeeping skills to maintain a healthy cash flow. Accountancy software like Xero is an ideal helping hand for those who feel tentative about running their business finances. These tools make it easy to view, organise and analyse your money in and out, as well as payroll and expenses and tie in seamlessly with Square for an easy way to manage your business.
5. Use an invoicing tool that allows you to send reminders and get paid fast
Everyone wants efficiency when it comes to invoices getting paid, so you should opt for efficient tools for managing them. Square invoices are sent digitally and let customers pay you in a click, no fuss, no waiting. You can also send reminders to prompt your customers to settle their payments and track all your sent invoices right from your dashboard. If you’re still stuck in the days of paper invoices then you need to step up – the more convenient you make it for your customers to pay you, the quicker they’ll do it.
6. Manage your inventory
A dwindling cash flow isn’t just about you not getting enough customers through the door or invoices paid, your inventory can have a huge effect on the finances of your business. Make sure you’re being smart about your stock, under or over ordering can make a big impact on your cash flow.
Similarly, not making a big enough push to sell your stock at full price (leading to end-of-season sales on items you previously hoped would be top sellers) can end in a loss. Make sure you sell perishables in order of their best before dates, so that you’re not forced to slash prices to make sure they’re sold before they are destined for the bin.