What can I do to improve my cashflow?

With these times being as unprecedented as they currently are, I felt it prudent to re-publish a blog from 18 months ago, updated to suit the current situation.

So, are you one of a number of business owners who are currently experiencing troubles with maintaining a consistent cashflow? If you are, you may find that you can’t or may not be able to pay your bills on time in the coming weeks and your expenses are fast getting out of hand. Cashflow problems plague every small business owner at one point or another. Sometimes it’s natural to go through the occasional rough patch. However, that doesn’t mean that these rough spots can’t leave lasting damage on your finances. To avoid letting these problems ruin you, here are few ways you can look at to improve your net cashflow.

Accept Credit Cards From Customers

You do not have to be a retailer to accept credit cards. Many small business owners make this mistake and it can potentially cost you a lot of business. Consumers use credit cards to make a variety of purchases and a lot of them don’t carry cash on them. When they use a credit card to pay for things, you will typically get the money in two to three days. While this can seem like a bit of drag at first, it will quickly remedy itself as the cash flows from these transactions pour in. In person or on-line, how can you take card transactions if you are not already doing so?

Keep on top of your creditors

When was the last time you checked out who owed you money? Make sure that you keep check on aging accounts from existing customers. Do not wait until they have been dormant for six months, by that point you’ll likely never get that money from them. If you have not received a payment by the next billing cycle, put your credit control procedure in place. Don’t have one? Click here and ask me for one and I’ll get it over to you. If you have not received a payment from a company that usually pays on time, speak to them first to find out if there is any problem with the service you are providing or the order. While many cases of outstanding payments result from negligence, this is not always the case!

Raise Your Prices

When was the last time you raised your prices? When you first started out, you may have kept the prices of your products or services low to build up a customer base. However, as the business matures and you build up a steady stream of customers, it many come time to raise your prices. You will want to be careful about doing this – if you lose more business than what you get from raising your prices, then you’ll actually lose money in the long run. But done right, you can easily increase your cash flows this way.

Take Up Front Payments

Do you invoice at the start of a project? No, why not? What has it cost the business to mobilise the job? Do not start working without pay. Ask for a mobilisation fee that covers, as a minimum, your time and labour costs in setting up a new contract if you are working on a long-term project. This is not unreasonable in most industries, especially in the construction arena and your client should not have an issue paying this. Be especially persistent about this if it’s with a new client. It may be difficult to collect if you don’t know the customer well. If the business gets defensive about paying a minority of the total fee up front, that can often serve as a red flag.

Do you have a cashflow forecast in place? No, then click here and just put ‘Cashflow Forecast template please’ in the message box and I’ll get a template over to you.

Also, visit my home page to see how business coaching can help you and your business through these trying times. Ask me about ‘Pro-Bono’ coaching sessions too.

Ian Finney – 07716 292378 or ianfinney@actioncoach.com