As a small business owner, being on top of your cash flow is mandatory. You should be able to manage it effectively or else, your business will not thrive. As you know, you need funds for your business to operate. So, keeping a close eye on how much money is flowing in and out of your business is critical.
This article will tell you how you can manage your small business cash flows effectively. Check out our tips so you can learn how:
Tip #1: Make a Cash Flow Statement
Making a cash flow statement is the first thing you can do in order to manage your cash flow effectively. A cash flow statement can tell you about your business’s current situation. If you have a cash flow statement, you can see an accurate picture of how and when money is coming in and out of your business, thereby helping you understand how much you need to earn to break even.
Having a cash flow statement can also help you measure your performance, track growth, and address any issues before they begin to threaten your business. It will also serve as your reminder when your payments are due, so you can allocate funds accordingly to avoid overspending.
Tip #2: Never Miss Out on Your Invoices
You should never miss out on your invoices because they can significantly affect your cash flow if there are late payments from your customers or clients. As a small business owner, you should lay all the critical information regarding your customer-business relationship, including the payment terms, due payment dates and the like to avoid delayed payments. To maintain your healthy cash flow, you can send polite reminders when payment deadlines are near. If there are late payments, don’t be afraid to chase after them but make sure to be fair.
Tip #3: Be Smart About Payment Terms
Remember, your business cash flow is on the line. So, it’s important to implement wise payment terms for your customers. This way, you can ensure that they will pay quickly or in a timely manner. When you do business with them, make sure to clearly discuss what will happen if they pay past the due date. Adding a late payment fee is a very effective way to encourage them to pay on time. However, don’t harass your customers, and give them a reasonable window to maintain good customer service.
Tip #4: Hire an Accountant
Let’s admit that you cannot do all things for your business. Sometimes, you need to focus only on one thing to provide better service for your customers. As you know, monitoring your business cash flow can be a full-time job. But, you don’t have all the time in the world to attend to all your business needs. So, you should have someone who can focus on your cash flow to manage it effectively. Let an accountant do the job so that your business cash flow will run smoothly.
Cash flow management is such a tedious task. It takes a lot of time and skill to master it and be effective in doing it. If you don’t want to risk losing funds for your small business, you should prioritise your cash flow management. Remember, you don’t have to do it alone; you can seek help from a professional accountant who can oversee your business cash flows.
If you are looking for a small business accountant in Bristol, you’ve come to the right place! BarretStacey Accounting has a friendly and approachable team of accountants and bookkeepers that can help you with your accounting and bookkeeping requirements. We offer all the services you’d expect from a traditional accountancy firm on a fixed fee basis, so there are no nasty surprises at the end of the year. Get in touch with us today!