A healthy cashflow is more important now than ever before. With the rising costs of living, a rise in National Insurance Tax, and inflation at an all time high, businesses are feeling the impact. Prioritising a healthy cashflow will help you.
It’s important to ensure that you’re sending your invoices to the right person at all times. If you make friends with the accounts team or employee, you’ll always be in the know and have up to date information and contact details.
If possible, buy anything you need for your business in bulk. Often buying in bulk allows you to save money in comparison to buying smaller amounts - and if it doesn’t, ask for a discount. This may seem like a big dent to your cashflow at first, but it will help out in the long run.
Do you use a service where you pay monthly? Look for any offers, such as paying upfront for a year with a discount. A good example of this is accountancy software - often providers offer twelve months for the price of ten if you pay for one year at a time. Again, this can seem like a big outgoing, but if you’re in the position to spend that chunk of money, the cashflow benefits are long lasting.
How often do you check your regular outgoings from your business bank account? If the answer is not that often… you need to change that. We often take out subscriptions and free trials and then completely forget about them. By checking your outgoings regularly you’ll find it easier to spot these and cancel anything you’re no longer using. It might be a small amount of money, but it still helps.
If you’re looking to apply for loans at some point in the future, it’s best to start looking earlier rather than later. You don’t want to be in a rush to find funding, as although it can be very quick to secure, it’s not guaranteed. Invoice finance can be quicker to secure than say, a bank loan.
If you’re a young business, or someone who rarely gets paid late, you may not have set up a credit control policy within your business yet. However, they’re really important, and can be incredibly useful. A credit control policy includes the strategies employed by a business to accelerate sales of products or services through the extension of credit to potential customers or clients. It might seem like an unnecessary task, but trust us, it will come in handy.
If you don’t already, why not consider requesting a deposit upfront for new projects? Of course, this isn’t always possible and is dependent on your business, but if it is possible, try it out. It doesn’t necessarily have to be a large sum - even 20% would boost your cashflow, allowing you to take on more work confidently.
Are you looking to buy a new piece of equipment? Why not rent it instead? If it’s something you only need short-term, even better. There are lots of places to rent items, especially tools. If it’s not possible to rent something, you could consider reselling your old model and putting those funds towards buying new equipment.
If things get really tricky, you could always consider selling off less important assets that belong to the business, such as equipment or property. This is of course a very difficult decision to make, and not a decision to take lightly.
One of the things that business owners can often forget is that they’re not alone. There are a huge number of entrepreneurs and fellow business owners across the UK that you can connect with. Look for Chambers of Commerce and business support groups in your area, or check LinkedIn and online forums for industry specific support groups. Talking through cashflow issues with someone else who understands is hugely valuable - even if you don’t walk away from the conversation with solutions, we can guarantee you’ll feel a whole less stressed.
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