So what are the typical signs that cashflow is a problem for your business ?
1. Struggling with meeting the payroll payments at the end of the month
2. Difficulties with getting payment from your Customers – and seeing your unpaid invoices
rising
3. Avoiding certain Suppliers as you know that invoices are overdue
4. Worrying as you approach the end of each quarter with the VAT return payment due shortly
5. Having ‘surprise’ or unexpected payments urgently appear during the month
6. NOT paying yourself on time (or at all)
If you want to improve your business' cashflow (who doesn't ?), our experience is that it is not one single thing that will improve business cashflow, but a combination of the ‘right’ things being done regularly and consistently each week and month!
These generally fall into the following areas
Customer management – timing of invoices, payment terms, credit limits
Management of costs and overheads – marketing and staff costs rising faster than sales, or unnecessary overheads
Supplier management – too many suppliers, agreeing to short payment terms
Management of business trading patterns – seasonal trading, large customer projects
Costs...
It is continually important to ensure any unnecessary costs are not still being incurred to your business i.e. check direct debits, software licence numbers, freelance v employment costs etc.
Costs are a critical aspect of financial management, and it's essential to regularly audit and optimise them to ensure the financial health of a business both now and in the future.
Cash and cashflow is the one thing that impacts directly on the success of your business i.e. you need to ensure that you can pay your staff, pay your suppliers, pay HMRC and also pay yourself!
READ MOREThe ‘holy grail’ is obviously to continuously and consistently grow your business, which usually means a focus on customers, invoicing and turnover.
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