Tips to improve your business cash flow

Cash flow

Tips to improve your business cash flow

In business, cash flow encompasses everything. Without a reasonable balance between incoming and outgoing payments, your business turns into a delicate organisation that could collapse at the slightest shift in the market or change in your sales. 82% of small businesses fail because of poor cash flow management and understanding. 57% of businesses have experienced cash flow problems at some point.

But if you’re worried about money issues, you’re not alone. Know there are plenty of strategies you can use to strengthen your cash flow, so let’s take a look at two of the most effective ones.

Crack down on credit control

When running a business, there’s a lot to think about – marketing, product procurement, product development, networking, taxes, the list goes on. Credit control can sometimes take a back seat. But poor credit control, or a lack of it, is costing SMEs around £6.7 billion when trying to recover the money owed to them from late-paying customers. When customers don’t pay on time for their products and services, your ability to pay your suppliers, partners, and own debts is in jeopardy. In fact, around 25% of SMEs who receive late payments have been forced to pay their own suppliers late due to cash flow problems.

To solve this, invest in quality credit control services. This doesn’t have to be expensive. You can outsource your credit control needs to dedicated, professional companies who act on your behalf to ensure your customers can and will pay you on time. And, when some slip through the cracks, they will chase them up for you, following all legal procedures to ensure you don’t suffer due to your customers’ late payments.

Cut costs

This is often the go-to solution to cash flow problems for a reason: it’s effective. By cutting your outgoing payments, you keep more of the money that comes into your business. You prioritise the necessities first, cutting out non-essential expenditures by:

  • Finding cheaper suppliers
  • Modernising your marketing efforts
  • Reducing or eliminating your office space – possibly working remotely
  • Minimising your tax bill
  • Switching to the cloud
  • Introducing automation and reducing staff

These tips are short but effective in tackling cash flow problems. Business managers and directors have used them time and time again as they fought against the volatility business can bring. Keep in mind these are just some initial steps towards a more robust cash flow. You need to put a more comprehensive plan in place to ensure you nurture both the top and bottom lines in your business and maximise your revenue.

The Big Hand team has extensive experience in helping businesses grow successfully in their industry. We provide effective business advice to guide you as a leader and help manage your finances as efficiently as possible. To find out more about our accounting service and business advice, get in touch on 0161 327 2911.

About the Author:

Since 2013, Sophie has been an integral part of the Big Hand team. As a social butterfly, Sophie is mostly responsible for introducing new clients to the company. If you’re an avid networking, you’re most likely to meet Sophie at local events. Alongside attracting new business, she also assists with account management, and she manages payroll on behalf of clients. For fun, Sophie loves to keep fit running or playing korfball with her team. She is also in the middle of learning a new language and so her most recent challenge is attempting to read Harry Potter in Dutch.