Successful businesses, whatever their size, have one thing in common – good control of their cash flow. No matter how big or small you are, this is one fundamental business essential that needs to get sorted. Businesses need to be adept at managing their cash flow in order to make sure they can pay and get paid, especially due to the current late payment problems and general economic outlook in the UK. So, we’re taking a quick look at cash flow and bringing you our top tips for managing your cash flow.
1) Make sure you know what’s going on – make cash flow forecasts regularly, if no continually. This will help you to identify any cash flow pinch points or bottle necks early on so you can address them.
2) Identify your main customer accounts and make a real effort to build solid working relationships with them.
3) Have a think about your own ‘flex’ options for credit terms so you can adapt to circumstances if they arise – for examples, non-business critical suppliers or spreading payment terms.
4) Stay in touch with your finance providers such as your factoring lender or your bank. Keeping communication channels open will show that you know what’s going on with your business and your cash flow.
5) Try to get payment from customers as fast as possible – one way to do this is to offer early payment incentives such as discounts in order to get the money into your hands early.
6) Make sure you credit check your customers – this will stop you enterring into working relationships you might otherwise wish you’d avoided.
7) Do your finance research – knowing the alternative options such as invoice factoring and invoice discounting could open doors to flexible, accessible cash flow solutions.
Make sure you’re in control of your credit control – if you don’t have an infrastructure set up, sort it out!