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Money, money, money: 13 cash flow tips for your business

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Cash flow, as most business owners know, is king. Becoming an expert on cash flow is important for growing a healthy business that lasts the distance.

Peter Switzer, founder of Switzer Financial Services, says that the number one business killer is a cash crisis. If you don’t have your cash flow under control, you are putting your business at risk.

Do a cash flow projection

It’s important to do a cash flow projection for cash management. This tells you how much money will be coming into your business and going out of it and can allow you to plan for the future. If you feel like you are clutching at straws on a daily basis, a cash flow projection could be the remedy.

One of the major examples of a cash flow killer is a debtor not paying up on time. Ensure you spell out clearly the terms of an invoice to your client in the early stages of a business transaction. If you need to call customers with a reminder to pay up, be firm but professional. If you dread having to do this, consider employing a bookkeeper who can do it for you. This will also give you time to work on your business, rather than working in it.  

Cash flow lessons

Switzer says the following lessons from professionals could give you a cash competitive edge:

  1. See if you can ‘GST’ your costs by cutting them by 10 per cent.
  2. Make sure you have the cheapest loans and you get the maximum interest on your cash balances.
  3. Get alternative quotes from other service providers.
  4. Ask your accountant to run the ruler over your costs.
  5. Establish a clear credit and payments policy with customers.
  6. Make it easy for customers to pay quickly such as with a credit card and through direct debit.
  7. Pay slowly but collect quickly.
  8. Have a script to prompt slow payers and take notes of all contact so they can be used for follow up phone calls.
  9. Ask for deposits and progress payments for long projects.
  10. Make sure you have the right level of bank overdraft – an inadequate one in a fast growing business can be a big mistake.
  11. Make sure you price for profit and be careful about discounting. A 10 per cent discount results in a much bigger drop in percentage profit.
  12. Sell equipment that’s not being used.
  13. Manage your stock so there’s not too much money locked up in slow moving products.
Get help on cash flow

If you are struggling with cash flow, or need assistance in that area, you could consider speaking with your accountant or with a business coach for tips on how to manage this important area of business. While this might be a cost, it may provide invaluable lessons for your business, saving it from being a victim of poor cash flow.

If you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching.

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Published on: Thursday, March 17, 2011

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