Cash flow – i.e. the money ‘flowing’ into and out of your business – is a lot more straightforward than many people make it out to be. If you have strong cash flow then your business will thrive; if your cash flow is weak or becomes blocked then the business will struggle. So, ensuring there is cash in the right place at the right time is essential for positive growth – but how do you stop cash flow problems from arising?
Don’t be a bad bookkeeper
There are so many important tasks to prioritise when you’re an entrepreneur and bookkeeping is often pushed way down the list in favour of developing or selling the products and services your business offers. However, no matter how good you are at what you do – or how innovative or in demand your products are – poor bookkeeping will scupper your business nevertheless. So, keep good, clear records, stay on top of bills and create an efficient system for invoicing and collecting payments.
Have a friendly lender on hand
Cash flow problems are not always the sign of a struggling business. You could go from having minus nothing in the bank one week to five or six figures the next after invoices are paid or products delivered and sold. Having a lender on side means you can bridge that cash flow gap when it arises so that it doesn’t impact on the ongoing growth of your business.
Learn how to forecast cash flow
Cash flow forecasting is often seen as complex and difficult and best left to the professionals. However, the reality is that it’s an essential tool for avoiding cash flow problems and, at the end of the day, no outsider really knows your business as well as you do. Simple cash flow forecasting is just setting targets for the next 12 months and creating a spreadsheet of income and expenditure during that time. This will give you a good idea of where any shortfall might arise.
Regularly review your outgoings
Are there any costs that you could cut? Are you overpaying or overspending unnecessarily in one area of the business? The leaner your business is in terms of spending, the fewer cash flow issues are likely to arise.
Professional advice can be the difference between cash flow success that drives business growth and failure that leaves you struggling. Lawyers, accountants, mentors and other business owners all have valuable insights to offer when it comes to avoiding cash flow problems. And if you really want to master your cash flow right now then download our Small Business Guide to Conquering Cash Flow for instant insight and practical steps.