Cash Flow - Top tips on how to manage it

Top tips on managing cash flow

Cashflow and how to manage it

Cash flow is critical to business and keeping track should be a priority but sometimes its difficult to find the time to ensure everything is up to date so you can see your current position.

The beginning of the year can be a good time to review your business to make sure you are on track. Cash is King and ensuring you have a plan in place to ensure cash comes in is essential.

So what is Cashflow?

Cash flow is the money flowing in and out of the business. It is usually measured over set periods of time, ie monthly, quarterly or annually and it doesn’t take a lot to work out that if you have more going out than coming in you have a problem!

Organise and Plan

One important step is to prepare a cash flow forecast. This will help to see what cash your business will need in the coming year and help you to manage any unexpected fluctuations in sales or purchases.

Once you know what you think you will spend you can then look at ways to improve efficiency. You can look at your business costs to see if you can make any savings on standard services such as electricity, IT, Insurances and other business costs.

Getting a forecast in place and setting indicators of when you should review and take action will be of great benefit, especially in those busy periods. If you have a plan you can easily refer to when you are busy it will help to avoid cashflow problems.

You could set time aside weekly or monthly to review your sales and purchases, creditors and debtors so you are on top but the simplest way is to use a cloud accounting package that gives you real time information when you need it. Find out more here:https://www.hwca.com/accountants-norwich/opinion/streamline-with-cloud-accounting/

Good Cashflow

The best way to avoid cash flow issues is to monitor your business cash flow on a regular basis. Know your customers and their spending patterns. Set levels of credit with customers and ensure they maintain agreed payment plans.

Using a cloud accounting package will make sure you keep timely and accurate records. You can then look back over previous business periods and be prepared. This will help to identify seasonal fluctuations that may affect the cash flow of your business.

Make sure you are aware of your profit margins and what they need to be. Its important that you don’t end up making short term low value sales which in the long term will damage your cash flow.

What can you do if you need cash now?

• Chase your debts – pick up the phone and speak to customers
• Bank – enquire about extending your overdraft – if the bank wont help look at alternative finance.
• Consider factoring or invoice discounting – these can give you 90% of the value immediately

What can you do to improve long term cash flow?

• Ensure you re using cloud accounting or bookkeeping software – read more here: (cloud blog)
• Make sure you manage your debtors and you know what is due when.
• Issue your invoices promptly – they can then get them on to their system quickly
• Cash flow forecasting – helps to predict peaks and troughs in cash flow
• Consider asset re-financing or sale and leaseback if applicable.

We can sit down with you and talk through your options and suggest the best options to suit you. We can introduce you to cloud accounting and the various apps and add ons that will make managing your cashflow and your business less time consuming and give you a real-time snapshot of your business as and when you need it.

Get in touch to see how we can help you manage your cashflow and give you peace of mind.