It’s said that businesses are only as good as the products and services they provide. While there’s some definite truth in this, businesses can only stay viable if they manage their business cash flow efficiently.
Want to know more about successfully managing your business cash flow?
Read more from Crest Accountants who assist business owners every day with their cash flow management.
1. Know your numbers
By investing the necessary resources in the production of accurate job costing, analysis of historical accounting information, and forward planning with cashflow forecasts, the data you need will be at your fingertips.
Having oversight of up-to-date data facilitates good decision making by enabling you to:
- Know which products or services are the most profitable
- Implement advertising campaigns at strategic times and track their impact
- Monitor expenditure and minimise wastage
- Monitor stock levels and turnover
- Know when you expect to have surplus cash or shortages.
So, what should you do? Consult with your trusted business accountant for tailored business accounting advice and solutions.
2. Manage your debt levels & review your interest rates
Before taking on any new debt, factor the estimated repayments and interest into your cashflow forecasts and budgets. Test the effect of possible interest rate rises. Periodically review your interest rates with a lending specialist to ensure you are always getting the best deal. Don’t expect your bank to come to you when better deals are available.
3. Start a cash reserve
In a perfect world your business would have a cash reserve to access in times of tight cashflow. This may mean sacrificing some personal spending in the short term or making some tough decisions. If your cash reserve isn’t as high as it needs to be, a line of credit facility may be useful. These emergency funds will tide you over when the unexpected happens or during quite periods.
4. Stay on top of accounts receivable
Issue invoices to customers without delay and ensure they include terms and conditions for payment. It seems nice to give customers the benefit of the doubt when it comes to account payment, however clear and professional communication is necessary to ensure customers pay their invoices on time. This will avoid overdue invoice disputes months down the track. For large projects, requesting a deposit up front along with milestone payments will reduce the financial fall out if a customer finds themselves unable to pay their debts.
Don’t forget to follow the same principles for yourself by paying your bills on time, with no outstanding payments – to stay in good favour, but also avoid interest charges and further penalties.
All of the above are good principles to employ in your business.
For further assistance, seek out a cash flow forecast with your Gold Coast Accountant.
Want to see how a cash flow forecast to help with future business planning?
Contact Crest Accountants today for cash flow management and accounting services to help you better understand your current business situation, and where your business could be in the future.