5 tips to manage cashflow and improve business costs

5 tips to manage cashflow and improve business costs

Whether planning a start-up or reviewing financial management and operation of an existing business, there are usually two questions at the forefront of the mind: how do I manage cashflow best? And how do I keep business costs low?

To list down every recommendation, trick, piece of advice, process and consideration to address these fundamental areas of business success would require an extensive textbook… so this article offers five quick tips to establish control over your cashflow and business costs, and the impact they have on your profit, survival and growth:

1. Invoice smarter

Slow-paying customers can present a huge issue for small businesses in particular – especially when those businesses are experiencing the same issues as your business and waiting for their own cash to come in. It can be a tricky cycle.

Ensure your invoicing process is streamlined, invoices are promptly mailed out and the invoice content is clear and easy to read. Simple omissions such as failure to include purchase order numbers and payment terms can bring on setbacks and delays.

Assess whether your business is able to go one step beyond and make the payment process easier and faster for your customers.  Electronic payment systems, or discounts offered for rapid payment of invoices, can speed up transactions and may also improve processing times on your side.

2. Negotiate

Just because a price has been quoted, or you have been paying the same rate for years and years, doesn’t mean that is what you have to pay.

Work hard to negotiate with your suppliers since many are willing to discuss pricing and rates (they want to retain your business after all!)

Every little bit might just help – whether addressing standard utility overheads such as energy and phone bills, or working to pay less for the office stationery  – it could have a significant impact on your bottom line.

3. Get close to your accountant 

Many businesses, particularly smaller ones, look to liaise with their accountant only at a time of need.

A solid accountant can provide invaluable advice and serve as a useful resource, sharing knowledge, insight and recommendation all year round.

Services such as cost management, profit management, investment, funding consultancy and general check-ups can help you keep things on track and optimise the health of your balance sheet.

Build a regular relationship and dialogue with your accountant to drive smarter business decisions, higher profits, reduced taxes and improved cash flow

4.  Explore alternative credit and funding options

A wide range of alternative funding solutions are available in the market – non-bank lending is now at its highest in five years as more and more SMEs recognise the benefit of short-term, affordable cash flow solutions.

Beyond the company credit card, hire purchase agreements, leasing arrangements and overdrafts – cash flow products such as crowd-funding and invoice finance could provide much-needed cash and capital to help you manage seasonal demand, or the challenging peaks and troughs of delayed customer payments. If you have followed the previous tip and have a good accountant, they will be full of advice and recommendation on the best path for you.

Overdrafts, premium funding, lease facilities and cashflow funding products such as factoring can all be excellent tools to help match cash supply with outlays. These arrangements take time to set up, so you need to be prepared in advance.

5. Plan, plan, plan – and stick to it

Heavily monitor your balance sheet and your cash flow budget.

The continual review and action planning for the credit you arrange, the bills you pay, how you pay those bills, and when your payments are coming in are all critical for the survival of the business.

It is important to revise your cash flow budget periodically which an accountant can assist with and deliver as an automated, streamlined process. Simple exercises such as payment prioritisation, strategic management of credit terms, weekly cash flow projections and payment collections all form the foundations of the dynamic accounting function of a business.

A solid system in place such as this will also allow you to plan for lean times and schedule purchases and allocation of capital when you need it most.

About the Author: Beth Nicholas is a professional writer for Plus Accounting – chartered accountants and providers of business financial services based in Brighton, England.

Four Customer Focused Ways to Beat Big Business

Four Customer Focused Ways to Beat Big Business

By LeeRoy

You’ll often hear business advisers tell small and medium sized enterprises (SMEs) not to bother tackling their larger competitors. The big boys and girls have so much reach, so much advertising power, and so much capital that fighting them is like going after a Sherman tank with a pea shooter.

I’m here to tell you they’re wrong. Small business can stand in direct competition with big ones and come out on top. They’re more flexible, they’re hungrier, and they’re more likely to achieve consumer goodwill. Have a look at these four simple suggestions for cracking open the target market of your dreams.

Play to your audience

Consumers don’t like big business for the same reasons you don’t like big business. There’s a reason “faceless corporations” got that name. A large company has no soul, no personality. Find yours, and sell it with everything you have.

Your personality is the thing that sets you apart from the supermarket, or the global brand. Give your customers the one to one service they can’t get anywhere else. Respond individually to emails. Make it easy to talk to a real person on the phone, or in your store. In a world where even the simplest phone call to a bank means navigating dozens of automated menus, the personal touch is a selling point that really works.

Price yourself into the market

Don’t fall into the trap of thinking that small business = higher prices. You don’t have the overheads your corporate competitors do. Cut your prices to beat them and you’ll get more sales. This is the number one rule of supply. Price matters. If a consumer can find your product, or a comparable one, somewhere else for less, that’s the one he or she will buy. Offer a price promise. Refund the difference between your own products and those your consumers find cheaper elsewhere.

Become community minded

What’s the point of being a small business if you don’t make your presence felt in the neighbourhood? When small is your selling point, it’s important to get out and about, to get noticed, and to make friends with the consumers you are courting. Sponsor local events. Develop a brand culture that emphasises the accessibility and local nature of your products and services.

Be reliable

One of the key things that consumers identify as being wrong with big business is their reliability. How many times have you heard a friend complain about a product guarantee that didn’t do what it promised, or an item that failed as soon as it came out of warranty? Just by making and keeping simple promises, you can outline a real difference between your business and the larger competitor. Deliveries are an excellent example. Keep yours reliable by insuring them (Coversure Midlands Ltd has an appropriate product) and you’ll retain positive consumer expectations.