Need Help Managing Your Business Cash Flow?

Cash is king when it comes to the financial management of a growing company. The delay between your customers paying you to the time you need to pay your suppliers and employees is often a problem. The solution to this problem is cash flow management. This means delaying outflows of cash while encouraging debtors to pay you as fast as possible. The most profitable business owners prepare cash flow forecasts, often on a monthly basis, forecasts help businesses see ‘trouble spots; before they happen and plan accordingly.

Improving cash receivables

Here are a few ideas to help you speed up cash collection:

• Offer discounts for quick paying customers of those who pay upfront
• Ask for a deposit at the time the order is taken
• Carry out credit checks on all new customers
• Issue invoices promptly and follow up immediately if payments aren’t paid in good time
• Invoice finance is also an option (for more details on this please contact us on 020 7112 8300)

Managing expenses

Here are a few ideas to help you manage your expenses:

• If a payment is due in 30 days don’t pay in 15 days, take full advantage of the payment terms
• Use your bank funds transfer to make payments on the last day they are due
• Consider suppliers early payment discounts
• Don’t just focus on low cost when choosing suppliers, also look at the flexibility of payment terms.

4 Steps to preparing a cash flow forecast

1. Open up a spreadsheet, you can also use a blank piece of paper
2. Take your bank balance at the beginning of the month and add projections of inflows such as debtor payments, bank interest and capital.
3. Then deduct upcoming outgoings (ensure these are broken down on separate lines) on the balance sheet.
4. Look at the closing figure and repeat this forward, ask yourself “What’s the trend? Is it positive or negative?”. Based on your answer you will either continue running your business as usual or start making changes.

If you need assistance in preparing a realistic cash flow forecast, or cash management advice please do not hesitate to contact us on 01295 477 250 alternatively you can email [email protected]