In the current economic climate, many businesses are struggling, and this can affect a your business too, as clients make cut backs. You can improve your business finances by learning some smart ways to manage your money. ‘Turnover is vanity, profit is sanity, cash is king’. Do you take this saying to heart in your business? Having enough cash in the business is critical for both your sanity and your success. Here are ten tips to help your business cash flow:
- Stay on top of invoicing and send out bills as quickly as you can so you get your income as soon as possible. Make sure that you have a system for invoicing, whether you set up a database of client details in excel or use an accounts programme like Sage. Think about the terms for payment that you offer each client: do you need your bills paid on receipt of invoice, within 14 days or 30 days? If you have completed work it can be reasonable to ask for payment on receipt, for example. If you will incur up-front costs on a project you may want to ask for a deposit.
- Pay staff and freelancers promptly. Staff will rely on income from you, so be a great boss and pay on time at the end of each week or month. If you commission work out to freelancers and want to develop a good working relationship so you can go back to them time after time, pay them promptly too!
- Pay other bills only when they are due. Check each invoice for payment terms and pay on the last day possible for the money to get to the payee in time. This ensures that the money stays in your bank account for as long as possible, helping you to cover your costs while waiting for clients to pay you.
- Deposit cheques promptly. This all helps ensure that there is as much money as possible IN your business account, rather than sitting on your desk!
- If you don’t have one already, look for an interest-paying business deposit account for your business reserve, and sweep money into this account regularly. Even though interest rates are low, a few per cent interest is better than nothing. By doing this you will get even more benefit from invoicing promptly and paying in cheques as soon as you get them.
Follow these steps, and keep track of the money coming in and out of your business. You will soon find that you are on the way to having a healthy amount in your business bank account.
Antonia Chitty helps business owners succeed. She provides practical training and helpful tips at www.antoniachitty.co.uk and www.familyfriendlyworking.co.uk. Her latest books include Blogging: The Essential Guide (Need2Know) and Making Money Online (Hale Books).