We cannot stress further the importance of properly managing your cash flow to ensure the smooth running of your business. Managing your cash becomes a necessity for business survival, especially in tough economic times.
If you are experiencing cash flow troubles, here are five things you can do to manage your cash flow better.
- Check your expenses.
Now is the perfect time to review where your money is going and check which expenses can be minimised or eliminated completely. Re-evaluate your expenses and decide which ones are essential and should stay, and which ones can be trimmed down or cut altogether.
- Negotiate your debt.
Initiate a discussion with your lenders if interest only or deferred payments on outstanding debts is possible.
- Consider reducing your rent.
You can further reduce your rent by checking if it makes business sense to move to a smaller space, close down other offices or stores that are not performing well, or move to a more affordable commercial space within your budget.
- Request for more flexible payment options.
It never hurts to ask, especially if you’ve been transacting with your vendors for a long time and you’ve established a certain level of mutual trust and confidence. You can request for more flexible payment options or longer payment terms.
- Tap into available credit lines.
Take advantage of available lines of credit and place the funds in interest-bearing accounts.
- “Scrutinise” your new clients
Be vary carefull with new clients. Are they able to pay for the services they requested? Do your research about their financial position prior to undertaking any engagements.
- Avoid Aging Debtors
Chase ageing debtors carefully. Follow up with them regularly. Make sure that they know regarding the outstanding debt. Establish strong and regular debt collection processes.
- Invoice regularly
Establish your cycle (weekly, monthly etc). The golden rule is: Get the job, Complete the job, issue and send invoice. This simple rule will have a dramatic positive effect on your cashflow.
Assessing your cash flow is fundamental to gaining a better understanding of your business’ financial health. If you are currently experiencing small issues with your cash flow talk to a professional as soon as you can. As cash flow experts, we can do your monthly, weekly, or even daily cash flow statements. This gives you visibility on where your cash comes in and goes out to, as well as allows you to plan ahead.