Having a steady cash flow is essential for a successful business. But knowing how to manage one is difficult. If your business has many moving parts and limited resources, you can easily find yourself in a bit of a stressful situation. Fortunately, there are ways you can help to manage your cash flow to make sure you have a steady balance.
How To Keep A Steady Cash Flow As A Business
1. Forecasting and monitoring
Before you can start to increase your passive income or spending, you need to have an accurate picture of your finances. Once you have everything organised, you should be able to start predicting your financial forecast.
Proper planning will help you avoid running out of money unexpectedly. Make it a habit to monitor your cash flow regularly. If you do this at set times, maybe once a week, then you will be able to notice any unexpected changes and be able to adjust.
2. Ensure customers pay on time
Making sure you send any invoices as quickly as possible will help your customers remember that they need to pay you. Customers paying late is one of the biggest hiccups that can ruin cash flow.
If your customer hasn’t paid in a reasonable time, send them a reminder invoice and email a couple of days before the deadline. This may jog their memory and fix a possible oversight. If you use accounting software, you may be able to utilise an automatic reminder system that is built in.
In the event that a customer does not pay at all, and you have already paid VAT to HMRC in your quarterly bill, there is a way to claim this back. This system is called Bad Debt Relief and, subject to some conditions, can help you to recover any unfulfilled payments.
3. Build relationships
Chasing payments can feel incredibly awkward, especially if they are new clients or you are newer in business. Building strong relationships with your customers from the start will help to lessen this feeling.
Focus on checking in with your clients regularly. Giving them updates about their order or sending them pictures of the work so far can help to instil a trusting relationship. In turn, this will make your clients think of you and your business more favourably and reduce the chance of them missing a payment deadline.
4. Consider professional help
Businesses up and down the country employ professional help when it comes to managing their finances. Finding a firm that you can trust is important, as you will need to be able to work with them in achieving the dream for your successful business.
Financial professionals will be able to help you with everything from taxes to cash flow to restructuring advice. There is also plenty of advice on the HMRC website concerning taxes such as VAT, Corporation Tax and PAYE.
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