Sensible tips for managing cashflow – Staying on the financial ball

Sensible tips for managing cashflow – Staying on the financial ball

You run a small business. You're owed lots of money but your customers don't seem to want to pay up, or at least pay on time. If you're suffering cashflow problems you might even find your bank tells you to sling your hook when you ask for help, even though it's clear the cash is owed to you. As a result you're constantly struggling to cope, always running to catch up, and it's beginning to drive you just a little bit nuts as well as delivering sleepless nights.

Fix your cashflow issues with our 17 essential tips

It's horrid. But it can be fixed. Here are our top tips for managing cashflow without actually turning up on your debtor's doorstep in person and demanding satisfaction!

1.As a Brit you probably feel really uneasy talking about money. It's a national thing. It makes us cringe. But it's a thing you really need to get over if you want to create a smooth, efficient cashflow. Be brave, talk about money with your clients from the start, and it should prove less of an issue going forwards

2.Always know exactly what you're owed and exactly what's been paid. It'll make your life so much easier

3.Can you prepare in advance for cashflow ebbs and flows? Maybe you could save up an emergency fund to bolster you through lean times when invoices are just not getting paid?

4.Don't let things fall behind. Start off the way you mean to go along, and keep things nice and tight right from the start

5.Can you cut your costs to ease things a bit? It's worth a try

6.Can you charge more? When was the last time you put your prices up?

7.If a customer turns out to be a bad payer, get rid of them. Just because you run a small business it doesn't mean you have to accept every client and say yes to every project. Quite the opposite, actually. Some clients are toxic, so do yourself a favour and steer clear of the bad ones

8.Is there any way you can ask for payment up front? In some sectors it's OK, in others it isn't, but it's worth looking into

9.Will it help to charge a deposit, so at least you get paid some of the cash you're owed within a decent timescale? Give it some thought

10.Be crystal clear up front about how much you will charge, so your customers don't get any nasty surprises

11.Include a 30 day payment limit on your invoices, and make it prominent – a big, bold, red font will make it stand out, and making a 30 day limit really clear manages people's expectations

12.Include a short, bold sentence in the email you attach the invoice to, something like “Please pay within 30 days, ideally sooner" - again, making it really clear so there's no room for misunderstanding

13.Get busy with your calendar. Diary when the money is due. If someone hasn't paid and you're three weeks into the payment period, send a polite email to remind them

14.If it still isn't paid, send a polite reminder email on the 30th day

15.On day 31, make a quick phone call to 'make sure everything's OK' – a great excuse for phoning and something they'll probably appreciate if they've simply forgotten or lost your invoice. Because every contact point with a client is an opportunity to cement the relationship and even maybe get more work, it's a double-whammy

16.If the delay goes on any longer, either pass the debt to a collection agency, a VA or a business support expert who can handle it without any of the attendant emotion you're feeling

17.There's some top class accountancy software out there, and a lot of it lets you programme in auto-reminders for invoices as well as sending the invoices for you in the first place. Because it's not so personal, not you doing the reminding, it feels a lot less embarrassing

How does it feel to have the cashflow of your dreams? It's great to be able to fire-and-forget your invoices because your clients are all good, reliable payers. It's wonderful not to have to stay awake nights wondering if you'll be able to pay your mortgage or make your next office rental payment. It makes business so much easier and more pleasant to run, more exciting, more fulfilling. It's well worth getting to grips with cashflow for your sanity's sake alone. And it's so much easier to grow a business when you're getting regular cash injections instead of suffering from howling great gaps that last for weeks and weeks.

Need help with cashflow? Talk to us and we'll see what we can do. Call 01273 447111