We’ve all heard the saying that ‘cashflow is king’, so how do we get it flowing?

Managing cashflow is imperative to small business and a daily challenge to most. The money coming in to your business doesn’t always keep up with the money going out of your business; in other words, there are cash flow problems.  Even profitable businesses can face bankruptcy if they don’t manage their cashflow.

Here are 5 hot tips to help you manage your cash in-flows

• Review the amount of time that you allow your customers to pay you.  For instance, if you currently give your client 30 days to pay, consider reducing this to 14 days.

• Be strict with collecting the money owed to you!  Have a clean and clinical procedure in regards to collecting your money.  Remember, this money is owed to you, it’s your absolute right to chase it up.  Once the 14 days has passed, get on the phone to the client and even consider visiting them in person.  If this is not possible use emails and letters, but keep in mind that these forms of communication are easily ignored.

• Consider ways of getting paid before you do the work.  Most tradespeople expect payment immediately after finishing a job, and some even want payment before work commences.  Can you incorporate this practice  into your business?  Perhaps you can quote a fixed fee for services, or do a COD job, or at the very least ask for a deposit in advance.

• Consider offering your clients the ability to prepaytheir annual estimated fees to you in small direct debit amounts each month. This helps them spread the payment and also helps you to forecast your cashflow too!

• Invoice regularly! This sounds easy but you will be surprised how many businesses only invoice once a month. If you have provided your goods or services at the beginning of the month, it’s a long time to wait to collect your money. Especially when you add the number of days to the end of the month to the amount of time you then give a client to pay! It can quickly add up to 60 or 90 days.

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About the Author

Angela Brady is a Chartered Accountant, who owns her own Accounting and Tax practice – It All Adds Up. She helps individuals and small businesses with honest and affordable advice to maximise their refunds and make the most of their businesses. Check out It All Adds Up on Facebook, for free tax and business tips.