Tips for managing cashflow

Managing cashflow can be one of the biggest issues that start-ups and SMEs face. Whilst delivering services and products to your customers is the core priority, navigating the ongoing financial journey set against a turbulent economy could be the difference between success and failure for some.

In this article, we take a look at ways to manage cashflow to assist you with forecasting and to help future proof your business against issues that may arise.

Forecasting

One of the most important things to monitor is forecasting to help achieve business and financial goals. Once goals are established, part of the forecasting process is creating a business plan. This way you can better understand your commitments that will impact cash flow for your business and you can plan ahead month on month allowing you to prepare budgets and track expenses.

This is where you can benefit from an accountant’s expertise as they can take this task off your hands. Accountants will prepare budgets, create business plans, track expenses and will also provide forecasting for future financial needs.

Keep on track with bookkeeping software

You may wish to consider using bookkeeping software to track your profits. Xero is commonly known for being a cloud-based bookkeeping platform which can help you achieve new efficiencies and provide you with a real-time understanding of the status of your business. Xero enables you to record bills and expenses, create sales invoices and record all your bank transactions efficiently through the automatic bank feeds.  

Or you can work with an accountancy firm to Manage Your Accounts and provide ongoing advice on topics such as tax advice to aid business decisions and providing insight into tax efficiencies such as for company cars.  

Review costs

Reviewing expenses can help cashflow. Take time to evaluate what is necessary and what’s nice to have. Ask yourself some questions:

• What expenses can be reduced?
• What costs can be renegotiated with suppliers?
• Are suppliers open to different payment terms that could benefit your cash flow?

Industry funding and investments

With Coronavirus there were a lot of government grants and initiatives available to help businesses affected. However, navigating all schemes and funding can be time consuming and complicated. Sometimes it’s the last thing on your to do list or you hear through the grapevine that someone was turned down, so you don’t bother. But, stick with it!  You may find that there is industry funding available for your sector or perhaps it’s time to look at crowdfunding or other investment opportunities.

At McKenzies, we get to know you and your business to truly understand what’s best and advise accordingly. We’ll be able to point you in the direction of schemes offering funding for your industry and help with applications.

Stock take and promotions

Review what stock and equipment you have. If you have more stock than you planned to at this stage, is there a promotion you can run to entice purchase. This will not only help cashflow but it reminds previous customers and potential prospects that you are still in business. Encourage people to sign up for future promotions to help with ongoing engagement.

Read our blog How to Grow Your Business for further tips including improving online presence, refreshing websites and networking.

Late payments

Late payments can have a domino effect. Payment delays can really impact cash flow so getting on top of these will help improve the bottom line. Regularly chase payments and keep an ongoing, transparent conversation with suppliers to make them aware of situations as you may find you can negotiate different terms which can help improve cashflow issues.

Outsourcing to help you achieve your financial goals

Regular analysis of budgets can help achieve your business and financial goals. This enables you to be more accurate when it comes to forecasting to keep you on track and make any necessary adjustments.

An accountant can help you budget. By sending you monthly reports, you will see how your business performed against your targets. A full report at the end of the year summarises your performance and allows us to review any necessary changes for the next year.

By understanding income and expenditure, you can take steps to improve the areas of your business that aren’t performing as well as others which in turn will improve cash flow. McKenzies accountants offer advice and guidance from setting up your business through to managing financial accounts. We can help to guide you on the necessary HMRC forms to complete, legal requirements and keep your budgeting and forecasting on track.