Cashflow is obviously one of the most important considerations when running a business. It enables you to actually afford everything you need, such as wages, supplies, your own personal finances and anything else that is costing you. Despite its importance, many still get it wrong or don’t do enough to keep track of it. According to an ICAEW survey found that 42% of micro businesses and 65% of small and medium enterprises had some kind of debt. That is clearly a huge chunk of companies out there. Not managing your cash flow effectively will mean you’ll end up relying on borrowed money more and more.
Create Positive Habits
You would be surprised at how many business owners make mistakes which seem like common sense. It can be hard to keep track of everything though, and so it’s understandable if things are forgotten, missed or done incorrectly. The way to fix this is to get into a strict habit of doing things right from the off. This will help you keep on top of things and remember all the little tasks you have to get done. Make sure you always keep a track of all your money be it expenditures or income. Log it diligently and as soon as the money has moved. If you start leaving things for later you’ll forget them and it’ll be a headache to sort out later on.
Keep Looking Forward
So, it’s all well and good to be keeping track of your money on a daily basis, but that isn’t everything. You need to be thinking ahead and ensuring you know where your cash is coming from, where it will be going and when. This involves creating a cashflow forecast. To do this you’re going to need to sit down and think about all aspects of your monetary situation such as which clients are due to pay, what things you are going to have spend money and anything else which will alter your bank balance. You also need to keep the unexpected in mind too. Your clients may not pay on time, the photocopier might break or something else could happen where all of sudden you’re having to fork out. Ensure, if you can, that there is some money set aside for emergencies. It might be hard to find, but it’ll be much better trying to find it when everything’s going wrong.
Prepare to Chase Debt
As mentioned, there are going to be times when you are owed money from clients and customers (unless you’re very lucky of course). You need to be prepared for this and this involves having a procedure in place to chase these people up and get your money off them. This could include regular chase-up phone calls, a certain amount of invoices re-issued and then a more serious course of action. This is a good way to be clear to your client as well so they know you aren’t just going to let up and forget the money. Also remember that the longer you leave it, the harder it will be to get your money. Work quickly and don’t put it off.