Every business experiences cashflow problems from time to time but in some instances, poor cashflow can lead to insolvency.
It is vital directors get to grips with company cashflow as this ensures every penny is accounted for.
Commercial mortgage rates and payments are an important part of this. Keeping tabs on financial accounts will also provide any early warning signs if there is a problem, hopefully giving enough time for issues to be resolved.
Below are several tips to help control and improve business cashflow:
- Manage cashflow daily. This provides detailed accounts and records of how much money is going in and out of the business. It makes it easier to pinpoint any non-essential costs or expenses that shouldn’t be there.
- Don’t leave everything up to the financial director or manager. The business is ultimately your responsibility so you should know what the company cashflow looks like.
- If money is tight, it can be tempting to cut the marketing budget first. Don’t! Marketing is the best way to attract new customers and spread awareness about your business. Monitor spend carefully though, try different types of advertising to see which works best.
- Improve debtor collection by investigating why, if any, customers are paying late. Knowing exactly when you’ll receive payments will improve your cashflow records and planning. If late payment tends to be a problem, create stricter policies.
- If you need to free up some cash, look at ways to cut costs in the business – it’s easier than you think (see our article on 10 ways to save money in your business).
- If you’re struggling to keep up with tax payments, you may be able to arrange a Time to Pay deal with HMRC. This will let you pay off the debt over a few months or up to a year.
- Consider taking out a business loan or using an alternative finance provider to raise funds.
- Review your business model and get a fresh pair of eyes to look over everything. Seek advice from a friend or trusted adviser – they may notice something that needs changing.
If your company cashflow is starting to suffer, act quickly and follow the steps above. A successful business always has good cashflow.
“Watch the costs and the profits will take care of themselves.” Andrew Carnegie
Anna-Lisa Searle writes for turnaround and insolvency specialist firm, KSA Group, and is a contributor to www.companyrescue.co.uk. Rescuing struggling companies since 1997, KSA Group has been shortlisted in this year’s Insolvency & Rescue Awards for Corporate Recovery Firm of the Year 2014.