Every business can find ways to improve cash flow. Here are some suggestions from the team at Smart Franchise… to avoid overload, choose just one or two areas to work on at a time:
- Prepare a cash flow projection. Depending on your business, the projection may be monthly or weekly (13 weeks is ideal). Update regularly.
- Shorten the cash conversion cycle. This is the length of time it takes to find prospective customers, make a sale, deliver the product or service and get paid.
- Make it easy for customers to pay. Issue invoices promptly, offer payment alternatives and follow up if a customer doesn’t pay on time.
- Involve your team. Help them learn about business cash flow, and how they can help improve it. You’ll probably find they have some great ideas!
- Consistent sales and marketing. Daily and weekly business building is key to reducing seasonal slumps. Don’t let being busy stop you from business building.
- Get appropriate business finance. Use a smart mix of loans, leases/HP, overdraft and credit cards and cash to fund operations.
- Plan for tax. Plan ahead so you know what cash to put aside for your tax bill. Planning can also help make the most of superannuation deductions and save for the future.
Smart Franchise is Kate Groom and Peter Knight.