Many of our clients have the best ideas, are setting up amazing business concepts which are innovative and exciting and may even have investors backing them to get things started.
But no matter how well thought out and executed the business plans are, cash flow is a challenge, especially for new business owners. If you are reading this, you are probably facing a cash flow issue right now.
When things are tight, when you have to bills in your hand which are already overdue, when you are waiting for customers to pay you but they are dragging their feet….. What do you do?
These 3 tips will help you fix cash flow issues now and how to avoid them in the future:
1. Set up a Business Banking Account
With a business banking account you can separate your personal and business banking, which makes managing your finances and cash flow much easier on a day to day basis and also during tax time.
Some business accounts only offer the basics, but others provide services that really help with your cash flow including free business banking, overdrafts, interest and fee-free transactions. A few banks provide phone, online or face to face advice, which can come in really handy if you are facing a particularly difficult situation.
2. Communicate with Your Suppliers
The worst thing to do when you are facing cash flow problems is to stay quiet. The earlier you start communicating with the suppliers you need to pay when you are running low on cash, the more flexibility they can provide in relation to an extension or payment arrangements.
Open communication is the key, it will help you to get through the situation and avoid escalations which could include supply or finance withdrawal or even legal action.
3. Chasing Customer Payments
Many business owners find it difficult to chase their customers for payments of bills, even when they are overdue. But with a polite, friendly, client focussed and persistent approach your customers will appreciate you holding them accountable (no-one really likes outstanding bills).
Be clear in outlining the payment terms and your expectations and consequences of non-payment.
If you have any clients that are notorious late payers, consider if it is worth to continue doing business with them, you may be better off without them!
Last but not least, when you set up agreements with your clients, encourage them to pay via Direct Debit or Electronic Funds Transfer – this provides much better guarantees you will receive money on time.
If you are in a tricky cash flow situation now, be encouraged to know there is often a solution you have not thought of yet.
Through years of providing online bookkeeping and online accounting services we have helped many of our clients through tough times. We would love to talk to you about your current situation and see how we can assist you…
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