How your cash position looks will largely depend on the strategies you have in place. Maybe you have established a system that works but want to see if there are any opportunities to enhance what you’re doing right now. Perhaps you need to reconsider your current position because you are facing financial issues.
Whatever things look like for your business, it’s always worth keeping on top of the latest cashflow strategies. Here are some ideas to help you successfully manage your cashflow.
Predict what’s coming
Cashflow forecasting is a useful jumping-off point of you are trying to work out where your finances need to be. By looking at what’s coming down the line, you can see where cash is flowing in the way you expect it to and where there is room for improvement.
One way to make forecasting work is to shorten the time period. If you have been predicting for the year ahead but this has not been tallying with your estimates, switch to planning for the short-term. Using recent performance and factoring in seasonal fluctuations to estimate what’s next is especially useful when thinking ahead to growing revenue and when to cut costs.
Ask customers to pay faster
Should your forecasted revenue not be where you thought it would be at this point, it could be that you need to come up with a new system for getting customers to pay faster. Receiving late payments for invoices from customers can stall your cashflow and have an effect on other business outgoings.
To combat this, review how invoices are being managed. For example, if you have always only offered one payment method, give customers a series of options to speed up the process.
It’s also worth giving early payers incentives in the form of discounts. For instance, if you receive payment within 30 days of being invoiced, you could offer a 10% discount off the price. To successfully introduce this, however, it’s important that you have factored in the amount you will be discounting.
Find new sources of finance and make savings
Sourcing new financing streams and looking for ways to make savings is another option. There are a few ways to do this.
Firstly, a short-term loan can alleviate immediate cashflow problems or help to successfully steer your business through a growth period that requires additional finances. Companies like Liberis offer dedicated business loans that can move you towards cashflow success.
Another idea could be to sell up what you no longer need. If there is equipment that is not being used, you may find that selling it on can generate the funds that help to even out a blip in your cashflow.
There is also the option of finding new premises. If he rent you are paying for the office space you are currently in is a lot, switching to something more affordable can help to shift the balance in your favour.