subject: Tips For Small Business Cash Flow In Australia [print this page] Cash flow is what makes or breaks a business anywhere in the world. However, many small and large business owner do not do as much as they can to maximise cash flow, resulting in stress on the business, and missed opportunities. There are a number of easy, steps that can be taken to radically improve a the cash flow for a small businessinclding via factoring and how you can use it to advance your businesses cash flow.
Forecast your cash flow - many businesses spend a lot of time budgeting and planning, looking at sales, expenses, and production costs, but they often forget to look at their monthly cash flow. Get a good accountant, and at minimum do a monthly plan. If it appears as if might be getting a bit tight on cash, then start doing a weekly or even daily forecast. Develop an action plan around this cash -see how you might bring forward some payments, or speak to an invoice factoring company to see how they can assist.
If you do anything other than invoice on the same day your goods or services are delivered to your customer, then always be aware that you are actring as if you are their banker. This is why you need to collect the funds faster. It sounds obvious but so many business owners don't do it. get busy and track due dates, call your debtors so you can get their commitment to pay either earlier than the invoice states (30-60-90) or at least on time. This is how you will also identify any reasons why they might not be able to pay on time. Solve it now rather than later when the debt is already overdue. If you really need them to pay early perhaps offer a discount for early payment.
Decelerate payments -but make sure that you are strategic. If you are important to key suppliers have a well a conversation asking for some more time to pay them, and it will usually always often pay off. Just don't incur fines or late payment charges. Make use of finance products such as overdrafts, invoice factoring, and leasing which are all there to help you manage and exploit your cash flow. Don't be afraid to use these tools, as they are legitimate cash flow management tools.
Always have Plan B to answer these questions: What will happen if the bank pulls your overdraft? or what if you cannot get additional facilities to fund your new project? You must investigate alternative funding sources or as a final option, use a credit card. Manage the growth of your business - don't just assume that by accepting new orders and growing you will automatically generate profit. Always take a long hard look and assess the cash flow impact of any opportunity and decision. If by accepting that new project your cash flow will be pressured, then use it as an opportunity to ask for a higher price to pay for additional funding or ask for payment in advance.
Just remember, if your company is having cash flow issues, work closely with your accountant/tax advisers work out how much the business can afford to pay you then schedule it in the most efficient way for the business and for you. Stick to it. Remind yourself that taking out more might cause a cash crisis.
These are just some of the many ways to improve cash flow.
