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Cash Flow Tips

Your cash flow is the pulse of your business - so is it working hard enough for you? The more cash you are generating means you have more to invest into your business.

Obviously, you can invest in your business through borrowing (debt investment) or by bringing in new shareholders (equity investment) and these are both good options to use at the right time. Ensuring your cash flow is in order prior to any investment is an absolute must.

1) Do you know what your cash flow looks like? Do you review it in your management accounts at month end and do you know where the cash you are generating is going. Forecasting, reviewing and analysing cash flow is vital, enabling you to understand where your cash is coming from and going to.

2) Have you reviewed your direct debits recently? Do you still need those software DD's you signed up for long ago? These kinds of payments can be easily hidden from you and they are dead cash. Definately, stop all the dead cash payments.

3) Are your customers paying on time? Do you need to invest time in credit control or maybe even consider moving those long term bad payers to paying on order? Do you need to review and formalise your payment terms with your customers.

4) How do you pay your suppliers? Are you paying on time or early? When demand is high suppliers are going to prioritise their best payers, are you in the group of good payers? Naturally it is hard to pay on time all the time but making this a goal will help future negotiations.

5) Margins - what are the margins you are making and can they be improved? Is an increase in sales price feasible? Can you bring your costs down, maybe with better supplier discounts? Perhaps you need a supplier review to see if you can get competitive pricing elsewhere.

At Forth Accountancy we can spend time looking over cash flow as part of our services and we can use a cash flow calculator to show how much cash could be flowing your way by making changes.

Keep that pulse going!

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