It can also be difficult to manage, suppliers can put demands on your cashflow but want to pay you as late as possible can to help manage their own cash reserves.
Below, you’ll learn how to manage your cash flow. We hope this helps protect your business against unexpected financial strains.
- Keep Track of Your Cash Flow
Before you can fix any problems with your cash flow, you need to make sure you understand it.
The last thing you want is to discover you don’t have the cash you need in to keep the lights on.
A business plan can help to elaborate on the strengths, weaknesses, opportunities, and threats that could be impacting your cash flow.
There are other considerations you will want to bear in mind, such as how long it takes your clients to pay their bills (debtor days). How much credit do your suppliers give you (days to pay)?
Having access to credit is important it gives you some leeway if you find yourself unexpectedly having trouble getting an invoice paid from a customer.
2. Don’t Fall Behind on Invoicing
Typically, there’s going to be a lag between when someone receives an invoice and when they pay it.
This is why it’s important to ensure that your invoicing system is easy to understand. You will want to make the billing system clear and simple, letting clients know when bills are due and what happens if they fall behind on payments.
If you are travelling or you are just in an extremely vital and hectic phase of business development, make sure someone is able to take care of the invoicing. If there are unexpected issues with an invoice, don’t let the problem escalate it is better to tackle these issues as quickly as possible and resolve for the benefit of all parties.
Invoicing is detrimental to your cashflow and the lifeblood of a business. You could say it is the most important department.
If you are looking for a Business Loan or another finance product to help with your cashflow, Kingsgate Finance can help.
For more than 17 years, we have been helping business owners just like you find the financing that’s best suited to their circumstances.