As a small business owner, cashflow is one of the most important things to keep track of. It can be the difference between survival and succeeding.
As the cost of living crisis forces a lot of businesses around the UK to close their door, it is becoming ever urgent for business owners to take harder action to stay afloat. Many are being forced to take out more loans but you can beat that!
Cash flow is one of the leading causes of business owners’ anxiety and sleepless nights. If you’re struggling to keep your head above water, here are some tips to help you improve your cash flow.
Tip 1 – Keep track of your expenses and inventory levels
It might seem obvious for an accountant to say that you need to keep track of your expenses and inventory levels. However, in our experience, at least 90% of business owners are very unaware of all the subscriptions their company might have been paying for. (You will be surprised!)
By tracking all your outgoings and expenses, you will see where your hard-earned money is going. This will help you save money without even lifting a finger.
If you are in the industry which relies on inventory. It might be time to consider analysing stock levels on a product level. Remember – You don’t want to order too much of something that takes a long time to sell even if it is heavily discounted (Your supplier only discounted it to get rid of its stock on to you),
Tip 2 – Stay organised & plan ahead
The key attribute of a successful business owner is their ability to organise and plan ahead. The better you plan, the lower your chances of being hit by an iceberg while you sail your business through the storm called ‘cost of living crisis’.
Planning helps you to anticipate future expenses and have the money available when you need it. By planning ahead, you can cut unnecessary fees and avoid costly surprises. By taking this proactive approach, you can avoid many common cashflow problems.
Tip 3 – Send invoices as soon as products or services are delivered.
One of the best ways to improve your cash flow is to stay on top of your accounts receivable (customers who owe you money). Make sure you send across invoices as soon as products or services are delivered, and use accounting tools such as Xero or Quickbooks to raise and email invoices on the go. It is very likely for your customer to keep you waiting for money once in their head marked ‘task as done’.
This may seem like a small and boring admin task, but it’s crucial for keeping your cashflow healthy. The Sooner you can raise the invoice, the quicker that money flows into your account. By staying on top of invoicing, you can avoid missed payments and costly delays.
Thanks for reading! I hope this article added some value and has given you some helpful tips for improving your small business cashflow. Remember, healthy cash flow is essential for the success of your business and by taking proactive steps to improve your situation, you can ensure that your business stays afloat.
