Wayne Semmens from Scottish Pacific Business Finance shares his top five ways that small business owners can improve their cash flow. 

In a recent survey conducted for Small Business Week to identify major areas of stress for small business owners, it concluded that small business owners struggle to maintain adequate cash flow. In fact, of the small business owners polled, managing cash flow is the main stress producer (43%).

Considering its significance to business and to the emotional wellbeing of business owners, we thought we would focus on how you can put the flow back into your cash flow with 5 simple tips.

  1. Effective Cash Flow Forecasting. An inordinate amount of small businesses tackle the management of their business cycle without an effective form of cash flow forecasting in place. By thinking about and planning for your cash flow movements you are in a much better space to deal with unfavourable movements, and indeed the day to day management of your business. Ongoing monitoring of the forecast is then vital to ensure the business’ continued health and growth.
  2. 5 Tips Business Cash Flow picDebtor Management. This can be one of the most difficult and sensitive areas in effective cash flow  Make a plan and commitment to put the right procedures in place to chase up outstanding debts. Diligent emailing and calling of debtors can result in a massive improvement in the prompt payment of debts.  Failing that, you may want to consider engaging a company that offers debtor management services.
  3. Flexible Working Capital Facilities. You want working capital facilities that provide you with breathing space to develop as your business grows. Discuss the facilities available with your bank or financier, and understand how they operate. This includes any facility limitations that may stifle your ability to gain access to cash at critical growth periods in your business.
  4. Supplier Payment Terms. Negotiating favourable payment terms from suppliers such as paying late or by instalments can be an effective way to ‘horde’ your cash. Other businesses may have the ability to offer these terms, and by asking you may be able to tap into a valuable cash flow advantage.  Have a strategy before entering talks with your supplier and decide what are non-negotiable factors, such as payment dates.
  5. Stock Management. Ensure there is enough cash available for the operation of, and investment into the business by not tying up cash in stock unnecessarily.  Cash tied up in inventory is not able to work in other areas of your business, such as investment in sales or operational staff which could grow your top line revenue.

To read the full article “5 Tips To Put The Flow Into Your Businesses’ Cash Flow” click here.

Wayne Semmens is Business Development Manager at Scottish Pacific Business Finance.  If you would like to discuss the content of this article please contact Wayne on 021-644-930 or email semmensw@scottishpacific.com.