What steps can you take to improve cashflow?
That’s all good but the jobs not done until the money’s in the bank!
Without cash you cannot pay your bills and run your company the way you want. You need to keep the money coming into your company to make sure that it survives. You need access to finance and loans should you need to fill a gap in your cashflow as well.
Get paid for the work that you do?
The work for a job is not complete until the money is in your account. You should have a sure-fire way to make sure that you keep on getting paid for the work that you do. You need to keep relationships going with the clients that you deal with so you can get repeat work.
Ask them to pay!
The best way to do this is to give you customers a call and to chase payments for outstanding invoices. You will need to do this frequently until you get paid. Call ask for payment and ask for a date that it will be paid by. If it is not paid, call again. Rinse and repeat until it is paid. Be patient, polite and keep the conversation going.
Time your payments going out of your bank account
You should decide when it is best to pay your bills. You should look at the cashflow forecast that you have, see when you expect to get paid and what other bills you have got. When you see you have enough cash in the bank you can make the payment. It is important to pay in priority what you need to pay now and what can wait a little longer.
Make sure you can get spare cash if you need it
At some point you may need to use an overdraft, loan or some kind of finance to make sure you can pay your bills day to day. It is important that you have a plan and you know as soon as possible that you need extra cash in the bank account.
Plan as early as possible for cashflow
This is one of the main reasons to do as cashflow forecast so that you can start to plan for this early. If you plan early you will have more options and be able to get a better deal if you need a loan. Getting a better deal means being able to get better interest rates, more time to pay back and having more choice over the banks that you use.
Healthy cashflow gives you options
Once you have a healthy cashflow in your business it will give you options. It will give you chances to invest in your business. To work with better clients on the projects that you enjoy, to engage staff and get better premises. You know the bills will be paid so you can start to grow your business.
Cashflows are needed
To do all this you need a cashflow forecast and you need to be able to understand if you are running short of money or if you have cash to spare. it should be kept up to date and you need to constantly monitor it.