Ways to improve your business cash flow

By the resi financial blog team, 09 December 2014

Ways to improve your business cash flow

Christmas is a classic time for small businesses to run into cash-flow problems. Customers go on holidays and it can sometimes be weeks before bills are paid. Here are some simple tips to improve your business cash flow, not only over the Christmas period, but throughout the rest of the year as well.

- Make sure you have a good idea of your financial position so you are not flying blind. Start with your overheads such as wages and rent and then factor in what your margins are on the goods and services you’re selling.

 

- Implement a cash-flow budget and forecast that includes the time lag between when you sell the service and when you are likely to be paid. Add in quiet times of the year so you can prepare for them.

 

- Set the right price for your products and services. Setting them too low and you will quickly encounter cash-flow issues and set them to high and you might lose customers.

 

- Examine your payment terms. If you pay suppliers within 14 days but your average receivables term is 30 days, that’s 16 days where you need to fund your business through other means. Look at other suppliers in your industry to see if you can come to a more attractive arrangement. Or perhaps you could arrange a discount with your current supplier if you pay earlier.

 

- Chase up overdue accounts. Many businesses don’t like to chase their customers for overdue bills because they might lose them. But if they’re not paying you, how good a customer are they? You don’t have to be rude about it, just send a simple reminder and follow that up.

 

- Reduce your overheads. Do an inventory of what you can do without. Are you employing someone to come in to water plants? Do you keep your lights and computers on all night? Think about where you can make savings. And don’t forget to consider implementing some environmental options, such as using recycled paper.

 

- Review your financial products. Research the market to see if you can get a better loan or mortgage for your business. Some providers package up a range of features into their products such as fee-free transactions and credit cards, which could save you hundreds or thousands over the long term.

 

Resi has a wide variety of small business solutions and financial products, including commercial loans and equipment finance to help you grow your business. You can find your nearest resi local lending specialist here, or simply call 136 126.

Categories: business, cash, commercial, finance, flow, loan, small