If you want to keep your business healthy, efficient cash flow is essential. Here are some tips to help you further improve your cash flow processes, and therefore boost the health of your business.
If you want to keep your business healthy, efficient cash flow is essential. Here are some tips to help you further improve your cash flow processes, and therefore boost the health of your business. For example:
Optimise your debt collection process. Consider using an invoice factoring agency if you have too many late payers to manage in-house. They will charge a fee, but in some cases that's worth paying, if the alternative is writing off bad debts.
Ask your accountant to help you with financial modelling, which can produce useful insights into the current and future state of your business.
Consider where you can cut costs, but be wary of any knock-on effects on the quality of your service or product. Sometimes these only become obvious in hindsight.
Learn about wider macroeconomic issues so you can predict when your business is likely to have lean years or boom years, and plan accordingly.
“The first thing is putting money aside, across all businesses, regardless of industry or type. The percentage may differ depending how cost-heavy they are, but it has to be done.” - Ben Nacca, Founder, Cone Accounting
Expanding your business with solid cash flow
Once your cash flow has been optimised and you have the measures in place to avoid future cash gaps, it gives you the backing to consider expanding your business. Accountants and business advisors can help you decide how to grow your business. Although they may not have deep knowledge of your particular business, their broader knowledge will allow them to point out opportunities that you may have overlooked.
Be careful not to expand too quickly, as that can place renewed pressure on your cash flow situation. The rate at which cash flows through your business is one of the most important indicators of business success. Cash flow is the force that drives your business, so use it sensibly.