Tips to improve your cash flow?

To begin we can define cash flow as the movement of money in and out of a business, so when we speak that  there is a positive cash flow it  means businesses have more cash coming into the bank than they’re spending.

Why is a cash flow forecast important?
Cash flow statements show the net change in your company’s cash position from one period to the next, that’s why based on what your cash flow statements reveal, you might need to cut expenses or increase the cas

Tips to improve your cash flow

  1. Ensure you know your target market and potential customers within that market: A more focused target market results in less marketing expenditure
     It’s critical to keep your records up-to-date and monitor them regularly. Make sure all your invoices and payments are entered weekly into your financial system.
  2. Understand what problems your product or services solves for your customer
  3. Keep your marketing regular
  4. Keep a database of your customers
  5. Invoice quickly: deliver products as soon as they’re ready, and invoice when the sale is completed
  6. Request a deposit: For special or large orders
  7. Follow up outstanding payments regularly
  8. Get smart digital products to help you cash flow forecast
  9. Control spending: control costs and keep hold of your cash
  10. Monitor stock levels: track the movement of your stock and have processes in place to identify when new stock should be ordered.
  11. Reward staff behavior that improves cash flow: such as setting sales targets, reducing expenditure or paying commission on collection of payment from customer.
  12. Sell unnecessary assets: this action increases cash in the business and saves on costs, such as insurance and storage.

If you need  business advice contact us: www.ysaccounting.com.au

Four warning signs your business is in trouble:

1. Inability to pay your debts: 
Think about ways you could increase cash flow, such as: preparing weekly cash flow forecasts to understand what has to be paid, having solid procedures in place for collecting outstanding debts from customers, talking to your bank about putting a temporary loan in place

2. Poor profitability: 
Start to monitor profit, identify issues regularly and consider areas such as: gross and net margins, sales, review the productivity of your staff.

3. Inadequate financial records:
 It’s critical to keep your records up-to-date and monitor them regularly. Make sure all your invoices and payments are entered weekly into your financial system.

4. Continually replacing staff: 
Think about ways to reduce staff turnover.

Get your business back on track: finding a good bookkeeper or accountant and ask them what key financial areas should be reviewed regularly. Contact us: www.ysaccounting.com.au