The hallmark of any successful business is its attitude to cashflow. Staying on top of cash that goes in and out of your business will go a long way to making your SME run more efficiently and will even provide more insight into how you can improve it.
Here are 6 tips to ensure your cashflow is stable and consistent.
1. Set clear payment terms
This is perhaps the most important. You have to know exactly when you are going to be paid. If a payment is overdue and you don’t know, how will you be able to properly manage your cashflow?
Ensure the terms are clear and precise. If you know you need to be paid within the month, but some debtors are late, set the payment date to two weeks to as to maintain a consistent cashflow.
2. Invoice quickly
It’s very simple: the sooner you invoice, the sooner you get paid. Issue an invoice as soon as you’re ready and send it off by email – it will reach the debtor instantaneously and you will get paid faster
3. Monitor your cashflow
Modern technology spoils SMEs for choice. There are so many software programmes that allow you to measure your revenue against your costs. Even basic level analytics can go a long way to improving efficiency of many SMEs. Which leads on to…
4. Let technology manage it
Technology not only can help you measure your cashflow, it can also help you manage it. The rise of cloud software means managers and business owners can access vital cashflow information on any mobile device. It can also provide them with real-time analytics.
5. Don’t get bogged down in profit
Don’t just get forecasts of profit margins for years down the line, on day one you should develop and implement a strong cashflow plan. The profit won’t come if the cashflow isn’t there.
Young businesses should take into consideration how reliable clients are and try to work only with ones who are reliable and always pay invoices very quickly.
6.Forge a good relationship with your bank
The main way you can do that is by keeping it informed and up to date on your financial activities. If something unexpected happens, let the bank know. If the forecasts change, let the bank know. Good communication with the bank will make managing your cash flow much easier. The can offer advice and help.