Recommended AssociatesBooglesltdBy lisa Jan 21, 2010 - 7:31:41 AM
How To Improve Your Cashflow In 2010 – Top 10 Tips
Don’t be fooled into thinking the Credit Crunch is over! By Lisa NewtonThe doom and gloom was very apparent in 2009. All we kept hearing was ‘we just need to get through this year’… but for those businesses still standing – you got through it. Well done. 2009 is behind you. It’s a new year and a new decade, but that doesn’t mean that we’ve left all the problems behind us. In fact, if you actually allow your guard to slip now – with the false sense of security that everything is OK now – you will be crunch just the same. So, it’s important that you continue to keep your wits about you.
1. Get Payment Up Front
There is no rule that says that you MUST give credit. You can always ask for a 50% payment on account, and the remainder upon completion. If other people want to wait for months and months to get paid – let them. Quality customers will appreciate that you are running a business.
2. Get A Paypal Account
With a paypal account, you can accept payment by credit and debit card, and this is giving your customers more payment options. What’s more, the payment is immediate – unlike a cheque, which can take days to arrive in the post, and then you still have to bank it.
3. Set up Standing Orders
With customers who purchase from you regularly, work out an amount that they can pay you by monthly or weekly standing order. This will save them time having to “remember” to make your payment, and it means that you can better plan your funds, because you know you’ll have money coming into you regularly.
4. Plan Ahead & Make Provisions
If you do a cashflow forecast, then you’ll immediately be able to see when a possible shortage of funds might occur. And you plan for this dip accordingly. Either get an overdraft arrangement in place, or re-juggle your spending, so that you don’t fall into the red. Planning ahead will save you money and a lot of stress. Bank’s do not like unauthorised borrowing, and they will penalise you for it. By planning ahead, you will show your bank manager that you are a capable, credit-worthy customer, and you are more likely to keep them on your side.
5. Apply for 0% credit cards
A credit card can provide a useful stop-gap. You can make all purchases on your cards, and then pay the balance in full when the statement arrives each month. This method can allow you to keep your cash in your account for an extra 7-8 weeks, depending on the terms of your card. It is not, however to be recommended if you are not disciplined enough to clear the balance before the 0% runs out.
6. Start Selling What People Want to Buy
It sounds obvious, but many businesses out there aren’t making the sales, and they’re confused as to where it’s going wrong. Make sure you’ve done your homework, and really understand what people want to buy. Then start selling it to them.
7. Pay on Invoice
In future, ask all of your suppliers if you can pay them on invoice, or change your shopping habits. Instead of buying stationery from the corner shop where you have to pay in cash, and it could be more expensive, look at ordering it online, and paying on 30 day terms.
The aim of the game in improving your cashflow, is to reduce the amount of time people take to pay you, and increase the amount of time you have to pay other people – without damaging your relationships with either party.
8. Spend Less !!
It’s an obvious one, but the amount of people out there, who think each cost they have is “a necessity” and not a “luxury” is mind blowing. Be aware, no one is telling you to cut it out altogether. If you must send a letter, send it 2nd class, rather than first class. Or better still, can you pdf and email it over? Is that quicker and cheaper? Let them print it out on their paper, using their ink. But some things could be cut out – e.g. the subscription to the magazine that you don’t read. Are you on the right tarrif for your mobile phone contract? Do you really need 2000 minutes, or could you downgrade a band, chat less, and make a saving?
9. Asset / Lease Finance
You can safeguard your cashflow outwards on major expenditures by either delaying any major purchases, OR, if that’s not possible, then finance your purchases in a way that doesn’t require a huge initial outlay. Many businesses lease their equipment – computers, company cars, machinery, plant, photocopier –
you pay a small amount each month, and should anything break down, then the leasing company can replace or fix the item – all of that, including the insurance etc., is included in the leasing fee.
10. Set up a Savings Account to Pay Yourself First
Your cash will flow off and disappear into the ether if you don’t keep an eye on it. A little trick, is to make yourself one of your own creditors. Pay yourself first. Set up a standing order to go out to your savings account every week or every fortnight, or every month – and just make sure you set money aside for 1) Tax bills and 2) to save for an emergency. You will probably surprise yourself because you won’t miss the money when its gone, and your cashflow will improve because when you need the money – it’ll be sitting in an account waiting for you.
Lisa Newton is the Managing Director of a bookkeeping company that manages cashflow, money and the books for a variety of business in the
For more information, call us on 0844 8844 222 or visit: www.booglesltd.com
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