Cashflow. It’s something all business owners worry about. But getting into healthy habits doesn’t need to be hard work.
Our useful top tips—and an Allstar Plus business credit card—could help.
Your knowledge of your company’s finances is vital to its success. If you don’t have an eagle eye on what you’re spending, what you’re owed or what expenses may be coming up, your business could end up in a tight spot.
So here are a few dos and don’ts on managing your cashflow. Some may sound like common sense, but it could be useful to reiterate their importance here.
1. DO make a forecast
A well-organised cashflow forecast is absolutely vital so you can see what’s coming up and plan accordingly. Keep an eye on your available cash and profit to anticipate potential cash shortages in advance.
Investing in accounting software or working with financial experts will help you create accurate cashflow projections.
2. DO plan for seasonal fluctuations
You may experience significant seasonal fluctuations in your cashflow. The best way to plan ahead is to set aside profits during peak seasons to cover expenses during slower times. You could even consider offering off-season discounts to generate a more even yearly revenue.
3. DON’T be lenient with late payments
When you’ve provided a service that your customer or client is happy with, then they should pay you within a reasonable amount of time.
The potential problems come when they don’t pay on schedule. The customer is now wasting your time by making you chase a payment that should be in your bank account. Remember, it’s not bad practice to chase your invoices. By not abiding by the payment terms, your client is in the wrong.
Remember, the client may have just forgotten to make your payment. So, just wait a couple of days after the payment is due and send a polite reminder.
If you still don’t get payment, then you may have to give them a call. You might need to tell them that you’ll have to cease work for them until payment is made.
The last resort is to take drastic action with a County Court action. But hopefully, it won’t come to that.
BONUS TIP: Make sure to state your payment terms on your invoices. This can prevent problems further down the line.
4. DO create a cash buffer or contingency
Be smart by saving smart.
Make sure that a part of your revenue is regularly kept aside. You could even open a separate bank account dedicated to cash reserves and put a specific amount into this account every month.
Treat your cash buffer like a non-negotiable fixed bill. This will help you build it up and you’ll feel more relaxed knowing you have a reserve to call on if need be.
5. DO be ruthless with unnecessary expenses
It’s also good to look at any unnecessary expenses you may be incurring and remove them. Then just transfer those expenses into your cash buffer account.
So be ruthless – do you really need that rental item or subscription that you never use? Also, it’s a good idea to consistently negotiate with your suppliers regarding their costs.
6. DON’T think about cashflow at the weekend
Managing your cashflow is all about careful planning and being watchful over your business’ finances. Don’t let things slip, get into a routine and your business will better for it.
Remember to leave room for ‘you time’. Enjoy the fruits of your labour. Make the most of your weekends. Relax, have fun and remember – go with the flow.
7. DO have a cashflow fallback
The Allstar Plus business credit card, with up to 44 days interest-free credit* and credit limit of up to £100k*, could be the perfect solution for businesses looking for a fallback in case of unexpected issues with cashflow.
Apply today here.
* Subject to status and a full credit check. To be eligible for Allstar Plus, your company must be incorporated (e.g. a limited company).
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