Controlling the flow of cash of your business is essential because cash flow is the lifeblood of any business enterprise. If you don’t have a steady or good supply of cash, you will not be ready for any emergencies or untoward situations and can very well be on the losing end if something happens that you did not expect. Even if it’s as simple as a late payment from a customer, you can already be faced with a severe situation – and this is precisely where proper cash flow comes in. If you want to effectively manage your cash flow, here’s your absolute guide to proper cash flow management as a small business.
Get it right with your invoicing
Invoicing is essential if you want to manage your cash flow in a much better way, but what does it entail? It entails dedication and commitment, for one. Once you have already provided a service or delivered a product, you shouldn’t wait to send out an invoice. Waiting until the last minute to send out an invoice can hurt your business where it matters: namely, your cash flow. It would be a good idea to send your invoices as soon as you have provided the product or service, but make sure it is done correctly as well.
You can send out your invoices right after you finish a transaction or you can do it daily, based on your work. If you are offering a service, consider asking for an up-front deposit or a halfway payment; don’t be afraid to do this because many businesses already ask for this as a standard. The sooner you send out your invoices, the sooner your clients will pay – it’s just good business sense.
Make sure your books are updated and accurate
Bookkeeping is another essential task you have to pay attention to, but it can be easy to become lax with such matters especially if you have other things to do. But remember that the management of your cash flow is directly related to your financial reporting and accounting, so don’t let it become the least of your priorities. Set aside a time each day or week to tackle your financial records and transactions so everything remains updated and accurate. If you cannot do it yourself or simply have a myriad of other tasks to take care of, you can hire central London accountants to do it for you – and they can surely do other things as well, such as handle your tax returns, prepare your cash flow forecast, and more.
Be firm but polite with your clients
As every business owner knows, it’s important to keep your clients happy. But it’s equally important not to be too lenient, either. You can still be fair and direct without becoming a pushover, and you can do this by coming up with a good strategy for invoicing. On the other hand, if you already have a good strategy but you still have clients giving you difficulties with late payments or even non-payment, don’t hesitate to take more serious action. It would be a good thing to keep a close eye on the turnover of your accounts receivables at all times, and if your accounts receivables are getting higher, you may want to enhance your efforts for chasing payments as well.