As a business owner, it is important to stay on top of your business finances, whether your business is small and you want to see growth, or getting bigger and you want to stay efficient. You can improve your business finances by learning some smart ways to manage your money. Here are xx tips to help your business cash flow:
- Control your costs. This is a relatively simple way to help your business succeed, but one that it is easy to neglect as you focus on other aspects of management. When you started your business, you probably reviewed all your costs and looked to see if you were getting the best deals. How long is it since you did that? There are a number of steps to help you cut costs. Start by evaluating your current costs, and getting to grips with your spending habits and trends. Save money fast by looking for both easy wins – where you can cut costs right away – and the bigger savings, which might take more time to make if you need to shop around or get quotes for example. Talk to your suppliers about this.
- Break each of your broader costs categories down so you are clear about the details for your business – your utilities could include water, electricity and maybe gas, for example. Visit sites like makeitcheaper.com. One of the simplest ways to save is to use less: switch off lights or reuse scrap paper. Review the cost of your buildings and contents insurance, make sure that you are insuring for the correct level of equipment, and get new quotes for car insurance when renewal time comes up if you have vehicles. Business Woman Media has some really good points on how one can economize on the expenses that business vehicles incur.
- Review your spreadsheets, accounting programmes and petty cash for less obvious costs. Are you getting a good deal on buying coffee in bulk, or does a member of staff buy it in small jars as you need it, for example? Over the year, inefficiencies can add up. Office supplies are an area where the pennies count. Shop around for the best prices – make sure to think ‘value for money’ not just ‘cheap’. Purchasing supplies in bulk may be worthwhile. Don’t buy brand names if you don’t have to, and keep enough in stock to avoid expensive trips to high street stores for office supplies. Can you cut back on post costs by emailing or faxing as much as possible?
- Alongside cuts, it is important to think about the bigger picture too. There are some things that you shouldn’t cut as you could weaken your business for the future. Continue to invest in marketing, for example, at the same time as ensuring that you get value for money from what you invest. Check your budgets regularly so that you stay on track each month.
- To keep the money coming in, 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 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! This will build goodwill and give you a team that will go the extra mile for you.
- 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.
- Check your bank charges, and shop around for a better deal. You could save every month if you switch, or you may find your existing bank improves their offer when you explain to them you want to move to cut costs.
- Change the way you bill clients. If you have regular clients who want the same sort of work every month, set up subscription programmes. If clients to pay by direct debit your business then has a reliable income that you don’t have to chase each month. Incentivise clients by offering a small discount or bonus service. You’ll save time on invoicing too.
- Look for additional income sources. If you always recommend a particular product or programme to your clients, see if there is an affiliate scheme. If you review business books on your blog, embed an Amazon affiliate link within the title or image. If you have a popular website, allow a few relevant adverts. All these income streams can add up and improve your cash flow.
- At times you may need to invest to grow your business. If you are expanding you may need an overdraft to allow you to pay bills. It can be hard to get credit if your business is in difficulties, so ask your bank manager about credit terms well before you need it. Check around for competitive rates.
- Chase debts firmly. Ensure that one person is responsible for this, and that they allocate time every week. Have a clear set of actions to follow from a first reminder to sending in debt collectors if necessary. By setting up the steps in advance it is easier to put them in to practice when you need.
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).