A business can make excellent sales and profits but if you do not get paid your business cannot survive. As the saying goes - Cash is King.
By knowing where and when cash is coming into the business you can prepare yourself, so if a supplier or employee needs paying you have the cash to do it. It’s also useful to know where you can get a cash boost from when you’re just starting up or looking to grow the business.
So, how do you do it?
A good place to begin is with your pricing. Is it as effective as it could be? Why not have a read of our pricing tips and strategies here for some ideas on how you could improve your pricing.
Where possible set up payment systems such as direct debits or standing orders. This will help you know exactly when cash is coming into your business so you can plan your outgoings around this.
Paying debt slower and less for it is crucial for cash flow. Be smart here but not too aggressive. Have payment systems, negotiate discounts and even ask for help in making payments - everyone wants to be paid even if it takes a bit longer. Look at possibly switching suppliers for cheaper prices without compromising quality.
Obtaining grants and subsidies will always improve cash flow. Grants have dried up in recent years but there are still opportunities available. For some options have a read of this article.
Reviewing how your business is structured is always a good place to start making tax savings. Having the right structure can lead to current and future tax savings. Ask us how we can help you with this.
There is a wide variety of lenders available to businesses which can be of great benefit to cash flow. You have the traditional options such as banks, asset finance, and invoice discounting as well as newer types such as peer to peer lending and credit unions.
This wouldn’t be a short-term cash flow measure and needs to be carefully considered. Investors are likely to want equity but this could be done using Seed Enterprise Investment Schemes which reduces the exposure on the investor and could provide more cash to the business. Here’s an example of how we helped a client get Seed Investment.
Assets and Investments
If you have assets within the business which aren’t being used or are under used consideration, disposing of these could be a way to bring in more cash. There might also be opportunities to turn some of the assets into investment returns like rental income and licence fees.
Cash flow Forecasting
Having detailed cash flows can help to plan for peaks and troughs within a business and also help to identify surplus cash for future investment. Reviewing this against actual figures can help manage the business better.
Using forecasting software can also ensure that the business plan is continually updated to ensure the strategic aims of the business are being met. They can also help to easily flex the budgets or test out a variety of changes within the business to help with “what if” scenarios.
For further professional advice on cashflow preparation, budgeting and business development, please contact us on 0161 476 8276 or email firstname.lastname@example.org