Few things are more important to the growth and resiliency of a business than maintaining healthy cash flow. Having funds on hand provides you with financial independence. Additionally, it allows you to run day-to-day operations smoothly, whether it’s a booming or slow sales period. It helps you to meet financial obligations, pay your employees, and invest in your company’s growth. And if you want to offer more incentives to employees, such as a retirement plan or health insurance, cash flow is essential for that as well.
That said, cash flow management isn’t easy, and missing the smallest thing can put your company in a compromised financial position. SIL Solutions is here with some practical tips for how you can keep up with your small business cash flow and thrive for years to come.
Bring in a pro.
It’s important to have a basic understanding of your company’s finances. However, unless you’re a financial expert, chances are you could benefit from hiring someone who is. Not only can a qualified accountant ensure that your cash flow, taxes, and accounting are handled correctly, but they will have a deep knowledge of accounting software like QuickBooks. Moreover, this will free up your time to focus on the tasks and projects you’re most equipped for; that way, you can run your business without wasting resources on menial tasks.
As you look for a good accountant, consider freelancers. By going through an online job platform, you will find a wealth of reliable freelance accountants, and you won’t have to worry about paying employment taxes. Expect an accountant hourly rate of about £8.50 to £23 ($12 to $32 USD).
Develop a budget.
Yes, you have to spend money to make money, but your spending must be intentional and strategic. Impulse purchases of things your company does not immediately need can significantly harm your cash flow.
Develop a budget that prioritizes cash flow, meaning you don’t spend money on anything that will not instantly benefit your business. For investments that could prove fruitful for your company in the long term, hold off until you have saved up the cash necessary.
Send invoices regularly.
Few things are more important to your company's cash flow than how you manage invoices. To ensure that you get paid on time, send invoices as soon as possible. For one-time clients, this means sending an invoice immediately after the work is complete. For clients on retainer, set up a consistent schedule so that they will know when to expect their invoices. This will help them prepare so that they can pay your business promptly.
Furthermore, make sure all the information on your invoices is accurate. Double-check the client name, client address, balance due, and other information to avoid delay in payment.
Stay on top of receivables.
Too many small businesses experience cash flow problems due to unpaid invoices. If an invoice is overdue, take immediate action to collect a payment, even if you’re uncomfortable with doing so. Along with causing cash flow issues, overdue receivables can lead to debt. Some ways to encourage on-time payments in the future include sending payment reminders via email or text, imposing penalties for late payments, and providing discounts for early payments.
If you want your small business to experience healthy growth and success for years to come, then you must prioritize cash flow. Remember to hire a professional accountant to handle the most essential financial tasks, and create a budget that will hold you accountable.
Lastly, make sure you are sending invoices when you need to, and take steps to prevent missed or overdue payments. Keeping healthy cash flow will allow your company to live up to its potential, as well as provide you with peace of mind as the owner.
Would you like to read more helpful content or learn about our top-notch taxation services? Visit silsolutions.co.uk today!
Written by: Amy Collett