Cash flow is key for small businesses, from start-ups to legacy companies. There are many different issues that can impact on cash flow and, all too often, we just don’t see them coming. Even the slightest cash flow hiccup can be fatal for SMEs so it’s key to try and avoid them wherever possible. Awareness is essential – know what issues to look out for and you have a much better chance of not getting caught out.
Chaotic invoicing can drag you under
For any small business, invoicing needs to be at the top of the list. There are several stages to the invoicing process and all need to be carried out efficiently to make the process work. Once work is done, issue your invoice straight away. Make sure that the payment terms are clearly marked on the invoice – you can also mention them in a cover note. Don’t be afraid to chase up unpaid invoices – would you rather risk feeling like you’re being rude by chasing someone, or see your business go under because of lack of cash?
Bad accounting practices will cause costly confusion
It’s not easy to handle company accounts if you haven’t tackled this before. However, this is an unavoidable practical necessity. If you don’t have well-organised and up to date accounts then you will find it hard to see where you are with cash flow, which payments are coming up, which invoices owing and what resources you actually have available. That kind of loss of perspective can be disastrous in cash flow terms and could drag your business down.
External factors could overwhelm you
Anything from poor sales, to unexpected overheads can impact on your cash flow and these are the trickiest situations to prepare for, as there may be little warning. However, if you are regularly monitoring your business – from web hits (or footfall), to sales – then you will see the impact of these external factors early and be able to take account before your cash flow is beyond help.
Cash flow will be the life blood of your business so looking after it is crucial to commercial survival. If you’ve already experienced some of the above – or you’re worried about them – then now is the time to take action. A good accountant will not only help you to avoid the above cash flow issues but to rebalance and re-establish if you’ve already got into something of a mess. And that’s not all – from helping you to set up good accounting practices, to minimising tax and helping you to raise finance, the benefits to your cash flow of working with an accountant are numerous and ongoing.