Brisbane's Accounting & SMSF Specialists

How to increase your business cash flow

The lifeblood of any small business is all in the cash flow. The best way to increase your business cash flow is to have a written cash flow plan and to follow it. We recommend using the following strategies to improve your business cash flow:

  1. Work with an accountant that focuses on small business.
  2. Use real time software to manage your books such as Xero. This will enable you to have a clear and current picture of your profit and cash flow.
  3. Analyse your cash flow regularly.
  4. Ensure more money is coming into your business:
    • Establish a clear payment policy and communicate it to your customers.
    • Offer discounts if your clients pay upfront or early.
    • Offer multiple payment options such as ezidebit.
  5. Follow up your debtors. Software such as Xero can do this for you automatically by sending your customers email and text reminders.
  6. Think twice before purchasing new items of equipment. Saving a few dollars on tax may not be the best option if your cash flow cannot support the purchase.
  7. Lease equipment instead of purchasing.
  8. Invoice upon provision of service or item without any lag time in between, and encourage upfront payment.
  9. Negotiate better pricing and longer payment terms with suppliers.
  10. Regularly review inventory to ensure that you are not holding too much stock. Consider drop shipping or direct-to-door delivery from your suppliers to your customers.
  11. Reduce your overheads such as staff overtime, insurance expenses and phone charges.
  12. Consider an overdraft facility or line of credit as a fall back option in case you get stuck.

 

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