14 Sep Is your cash like a leaking tap?

If you want to be successful as a small business owner, you must take good care of your finances. It isn’t just about making a profit; you need to have enough cash in the bank as well. It’s hard to grow your business when you’re always running out of money. So, we are here to give you some tips to help you manage your cash flow, so you can keep running smoothly and plan for steady growth.

1) Calculate Days Cash on hand

Most business owners keep a close eye on their bank balance and make quick decisions about what they can or can’t afford. But the reality is that there’s always expenses coming up, whether you like it or not. So, it’s important to know how long your cash will last you before it runs out. This way, you can make informed decisions about what you really need to spend on and what can wait. We call this “days cash on hand.” The more days cash on hand you have, the safer you are. you should aim for at least 45 days cash on hand, but 15 days or more gives you a bit of a buffer.

2) Keep an Eye on you Cash Flow Forecast

Ah, the cash flow forecast, a mighty useful tool for your business (and my personal favourite!). This little gem predicts the future flow of cash in and out of your business. It helps you see if your going have any cash shortages down the line, so you can plan and take proactive measures to avoid them. Keep it updated on a regular basis, so you always know what’s going on with your finances.

3) Speed Up You Cash Inflows

You know what they say, time is money. That’s why it’s important to get you cash into you bank as soon as possible. You can do this by invoicing promptly and following up on any late payments. If you customers are taking too long to pay, you might consider incentivizing them with a little discount for paying early. Trust me, they’ll appreciate it, and you’ll get your cash flowing in faster.

4) Slow Down Your Cash Outflows

Now, I’m not saying you should avoid paying your bills, but you can certainly manage when you pay them. Negotiate longer payment terms with you suppliers, so you have more time to gather you cash. You might also consider scheduled payments instead of paying all at once. This way, you can spread your cash outflows and give yourself some breathing room.

5) Keep an Eye on You Expenses

You have to watch out for any unnecessary expenses. Take a good look at you spending and see if there are any areas where you can cut back. Maybe you can find cheaper suppliers or trade services with other businesses. Every penny saved can make a big difference to your cash flow.

There you have it. Follow these tips and you’ll be on you way to managing your cash flow like a king. Remember, keep your cash in the bank and your stressful days should come to an end.