One of the most important elements of running any business, and perhaps the most important when all is said and done, is your cash flow. If your cash flow is healthy, you will always have enough money to pay any suppliers, to service any wages, and to put profits back into your business so that you can grow and expand it. If your cash flow is problematic, you’ll be stressed, always searching around for money, and you risk your business failing altogether.
This is why cash flow management is so important. If you can plan ahead and ensure that you are receiving the money you are owed and that your outgoings don’t exceed your income, you should be able to grow your business in the way you want to. Read on for some tips on how to do it.
Know Your Figures
The first thing that will be of importance when you are looking for ways to manage your cash flow is knowing your figures. Unless you know exactly what you need to bring in to break even and then to make a profit, you won’t know whether you are being successful or not. You won’t know whether you need to raise your prices or bring in more work or anything else that you’ll need to consider when building a business. Neither will you ever be completely confident that you have the money to expand, to take on staff, or to buy in new stock.
If you don’t already know the figures, now is the time to find them out. Whether the information is positive or negative, it will give you a good basis for anything that comes afterward.
Set Invoice Terms
When you send out an invoice (which must be sent as soon as the work is completed or the goods sent out so that your cash flow can remain constant), you must include your terms along with it. These can be printed on the invoice itself, or you might include them in the email you’re attaching your invoice to. No matter how it is sent, it must be written down, and it should state exactly when you’re expecting to be paid, whether that is upon receipt, in seven days, in 30 days, or even 90 days. Your terms need to be explained so that any client understands what you want and what is expected of them.
If you have to spend out on a project and it will be some time before you can invoice the full amount, asking for a deposit to cover those costs is also a good idea.
If the terms of your invoice are not met, you can send reminders, and then, with plenty of warning, you can work with a collection agency to get your money in. As long as your clients know the process, they shouldn’t be surprised if they follow through with what you have said will happen.
Drive Sales With Promotions
Sometimes, no matter what you are doing and what plans you have in place, you will face a downturn in your business. It might be because you offer seasonal products, or perhaps because of economic reasons. It could be anything. When this happens, it’s wise to have a contingency plan in place to ensure you can still bring money in and your cash flow is not disrupted too much.
By creating some exciting promotions, you can drive sales up to replace your lost sales. Although you might not make quite as much as you would if you were selling at full price, it’s far better to have something than nothing when it comes to cash flow.
Have a Great Week!
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