Small Business Accountant Near Me: 6 Ways to Improve Cashflow in Your Small Business
Whether your small business is operating successfully or is on the precipice of a financial crisis, it is always important to be looking for ways to improve cashflow in your business. Cashflow is the backbone of your small business: it enables you to provide customers with your product or service, cover your monthly expenses, and make important decisions in your business. In this guide, we highlight 6 ways to improve cashflow in your small business. SureBooks is your small business accountant near me to assist your small business’s cashflow with expert services and trusted financial advice.
6 Ways to Improve Your Small Business’s Cashflow:
Cashflow is all the money that is coming into your small business (inflows) and going out of your small business (outflows) and will be distinguished as either positive cashflow or negative cashflow. Positive cashflow is the goal for all businesses as when cashflow is positive, you can meet customer demands, pay expenses, set aside money into your emergency fund, and make a profit while you are at it. When cashflow is negative, your expenses outweigh your generated income, which can make your business life a lot more stressful.
Every small business should continuously strive for a healthy, positive cashflow. Negative cashflow can occur at any time, which is why small business owners must keep their concerted attention on monitoring their cashflow and making decisions that will improve their cashflow. To assist you to ensure your cashflow is positive, we have highlighted our top 6 ways to improve your small business’s cashflow.
1) Prompt and Clear Invoices:
Positive cashflow will not occur if your small business is slack when it comes to sending invoices for products or services. If your customers do not have the invoice to pay you, you cannot expect to have money flowing into your small business. To get paid quickly and have a positive cashflow in your small business, you need to send invoices out immediately.
To improve the speed of your invoicing, it is important that you optimise your invoicing system in your small business. You can create a strict invoicing schedule that will help you or your employees ensure invoices are sent out consistently and on time. To avoid any delays that can occur in manual invoicing, you can use an efficient online accounting software, such as Xero. You ultimately need to ensure that your invoicing system is always working towards maintaining positive cashflow in your small business.
Sending out invoices promptly will mean nothing if your invoices are confusing or unprofessional. Ensure that the invoices you send are accurate, easy to read, have a consistent format, and boldly state the payment expectations. This will ensure that once customers receive your prompt invoice, they understand exactly when they need to make the invoice payment.
2) Encourage Customers to Pay Invoices Immediately:
Invoice payments are one of the many challenges to positive cashflow in a small business. Late payments will quickly turn your positive cashflow into negative cashflow, resulting in unnecessary stress and the discomfort of having to chase your customers for payments. Instead of simply hoping that your customers pay on time, you can encourage your customers to pay their invoices punctually with these three strategies.
Incentivise Customers: One easy way to speed up your invoice payments is to offer customers an incentive to pay the invoice on time or early. For example, you can offer a small discount for invoices paid within 1 week of the customer receiving them. With an incentive, everyone will win as customers will save money and you will receive your money faster, allowing you to maintain positive cashflow.
Penalty Fee: One thing that will jolt a customer into paying an invoice is a penalty fee. In your payment policy, you can stipulate that for each day or week beyond the outlined payment date, there will be a fee added to the expected amount. If you choose to enforce penalty fees, it is important that you clearly outline that your small business has a penalty fee for late payments, the penalty fee amount, and when the penalty fee will be implemented to avoid any confusion or loss of customers.
Invoice Reminders: While some customers will intentionally not pay you on time, most customers simply forget. To avoid this, you can send a polite reminder to your customers 1 week before the invoice is due to be paid, on the day that the invoice needs to be paid, or every few days after the payment date has been missed. Reminding your customers will also ensure that you stay on top of your outstanding invoices and allow you to keep in control of your small business cashflow.
3) Reduce Expenses:
Achieving positive cashflow in your small business is not only about looking for ways to increase your inflows, but it is also about decreasing your outflows. If your small business is struggling to achieve a positive cashflow, your monthly expenses may be the main problem. We have highlighted three effective ways that you can use reduce your expenses and thus improve your small business’s cashflow.
Cut Unnecessary Expenses: The main way that cashflow can be negatively impacted is with unnecessary expenses. Unnecessary expenses can range from fines for late payments to suppliers, having excess inventory needing to be stored, or having an unjustifiable number of employees. If you are facing cashflow problems, we recommend dedicating time to analysing your cashflow, or using the expert services of a small business accountant near me, to cut back any unnecessary expenses to start improving your cashflow.
Lease Over Buying: One of the most widely used ways across business types to improve cashflow is to opt for leasing over buying. This can refer to renting a property for your small business or leasing equipment you need for production. While in the long run you may spend more money, leasing can assist you to maintain positive cashflow until your small business is financially strong enough to make these purchases.
Negotiate with Suppliers: If your small business relies on suppliers for materials or manufacturing products, you should negotiate better payment terms with your suppliers. Better payment terms can be an extended schedule for payments, a discount for early payments, or a discount for bulk purchases. If your supplier is unwilling to accommodate your requests to reduce this expense, then you can consider finding a new supplier that is better suited to the cashflow of your small business.
4) Address Your Prices:
If your monthly expenses are as low as possible, your invoicing is accurate and prompt, and your customers pay you timeously, but you are still facing cashflow problems, you may need to address your product or service pricing. Many factors can result in inaccurate pricing, such as fear of not making any sales due to extremely high pricing or lack of expertise in your industry that results in inaccurate costs for your products or services. We have outlined how increasing or decreasing your prices can improve your cashflow.
Increase Your Prices: Your prices for your products or services may simply be too low to allow for positive cashflow in your small business. Other factors such as an increase in supplies or manufacturing may be eating into your profit margin. When you increase your prices in a fair and competitively accurate way, you will generate more income from the same sales which will improve your small business cashflow.
Lower Your Prices: Lowering your prices may seem counterintuitive, but this may be the best step towards improving your cashflow in your small business. Lowered prices may capture a wider audience of customers, allowing you to generate an increase in sales. Lowered prices may also make customers turn towards your business instead of your competitors, allowing you to benefit from their purchases. Incentivising your customers with lower prices can improve your small business’s cashflow.
5) Outsource:
An effective way to improve your small business’s cashflow is through tactical outsourcing. There is an outsourcing solution for almost all of your small business needs, such as using an expert marketing company for your marketing requirements or a professional small business accountant near me for your financial management. Through clever outsourcing, you can transform your negative cashflow into positive cashflow.
There are many ways that outsourcing can be beneficial to your small business’s monthly cashflow. Outsourcing allows your small business to gain the services of professionals without the fixed expenses of permanent employment, allowing you to reduce your monthly outflows. You will save any expenses related to office supplies, software upgrades, and our necessary equipment when you outsource. Outsourcing can streamline your business processes and improve your overall cashflow.
6) Forecast Your Cashflow:
One way to improve your future cashflow is through cashflow forecasting. Cashflow forecasting is the accurate prediction of the future financial situation of your small business based on your expected outflows and inflows. Accurate cashflow forecasting can enable you to premeditate any cashflow problems in the future and take corrective actions in the present to avoid negative cashflow through better budgeting, planning, and decision making.
For cashflow forecasting to be a beneficial way to improve your overall cashflow for your small business, it needs to be done by a professional accountant. You can easily outsource to a small business accountant near me for assistance and advice on your cashflow forecasting. They can then perform regular cashflow forecasting to ensure your business is continuously operating with a strong financial future.
Improve Your Cashflow with SureBooks Small Business Accountant Near Me:
SureBooks is your reliable small business accountant near me to assist you in improving your small business’s cashflow. We offer professional and affordable accounting services and financial advice to small businesses to ensure positive cashflow and success within your industry. SureBooks small business accountant near me is the accounting company you can be sure of to handle your financial management while you take care of running your small business.
We offer a variety of financial services designed to assist your small business to grow and thrive financially. With SureBooks as your small business accountant near me, you have easy access to accounting services, payroll services, financial reports, tax compliance services, and professional financial advice. We are your outsourced solution to gaining professional and qualified financial management for your small business.
With SureBooks as your small business accountant near me, your small business will benefit from the latest accounting and payroll software. We are partnered with Xero and SimplePay to make your invoicing, financial management, payroll, and cashflow efficient and easy. We are the small business accountant near me that will make your cashflow work for your small business with our expert services, use of the latest technology, and affordable accounting packages.
Improve your small business’s cashflow with the expertise of SureBooks small business accountant near me.
