There are numerous moving parts when it comes to operating an effective business. If you’re running a business ensuring you have sufficient cash flow however is one of the most important factors to maintaining smooth & stress free operations. Even the most profitable businesses can be caught off guard with a cash flow issue when their finances, operations and processes aren’t running at optimum efficiency.
There are several accounting strategies you can implement into the day-to-day operations of your business to ensure you’re not caught in a cash trap. These are our top 8 Business accounting strategies to save you money whilst you make it.
1- Invoice your clients or customers sooner
Depending on your industry and your own policies, invoicing sooner can ease your cash flow pressure.. If for example you deliver services. Invoicing before commencing the project can give you the peace of mind and ability to deliver a better job without struggling to make ends meet.
2- Request a deposit (or partial payment) & provide payment incentives
To help cash flow, it’s not uncommon for businesses to require a certain percentage of the cost as a deposit prior to commencing a project, with the remainder due upon completion. This is an easy policy you can put in place for your own business. Additionally, in an effort to encourage quicker payments you can offer early-bird pricing and discounts as a reward for paying sooner and upfront.
3- Provide Secure & Easy Payment options
When it comes to accepting payments – giving your customers a multitude of payment options can be very beneficial. We’re all unique and have different preferences on how we prefer to pay for goods and services. Providing alternative payment options can ensure you get paid on time. Some payment options include cash, credit, visa, paypal, direct transfer, Afterpay & ZipPay.
4- Set Up Email Automation for Outstanding invoices & Customer Disputes
You know what they say, plan for the worst and hope for the best. That is one of the not-so-secret ingredients to cash flow abundance in business. Having detailed processes and policies in place for when things don’t go to plan can help ensure your money is coming in when it’s due. If you need more advice on a debt recovery plan, we are here to help.
5- Monitor stock levels more carefully & move old stock
Many businesses who hold inventory have far more stock on hand than they actually need. This stock is just lost cash flow. It also becomes hard to monitor as new stock comes in and old stock remains. Taking notice of products which move slower than average gives you an opportunity to replace it with a faster moving item. Saving you more money and increasing your cash flow. In Addition, being able to source “last minute” suppliers who provide you with stock only when you need it can help you to prevent spending more money than you need to on an order – or stop you from wasting money on unnecessary outgoings like a storeroom or warehouse.
6- Use supplier contracts with clearly defined terms and conditions
Making full use of contracts can prevent any deals going sour and safe-guard you from bills remaining outstanding. They also allow you to leverage interest free loans on the money owed when you’re short in cash. This is known as invoice financing and can really help people who have long term contracts and extended payment times.
7- Sell Unnecessary Assets
If you’ve been in business for a while, chances are that you’ve accumulated a lot of assets that you simply don’t need anymore. Taking note of all stock on hand and determining whether all equipment is still needed is a good place to start. By the end you may find you have a surplus of unused stock, machinery or equipment that you can sell off to receive more cash flow.
8- Stop Buying Assets and Lease instead
If you’re in business, you’ll always have to buy new machinery or equipment – but not all investments are made equal. In fact most assets depreciate with time. Take caution when buying new things for your business, and if they’re not built to last or known to depreciate over time, consider leasing it instead.
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