Is your business cash flow causing concern? Effective cash flow management is critical to maintaining a stable and sustainable business. Below are five practical strategies to help strengthen your cash position.
- Improve accounts receivable: Issue invoices promptly upon job completion, or invoice progressively at agreed milestones. Ensure clear and enforceable payment terms are in place.
- Negotiate extended supplier terms: Where possible, negotiate 30 or 60-day payment terms with suppliers. This assists in smoothing cash outflows and improving short-term liquidity.
- Maintain a cash reserve: Setting aside surplus profits into a cash reserve provides a buffer during quieter trading periods or when unexpected expenses arise.
- Use cash flow forecasting tools effectively: Leverage the cash flow forecasting features within your accounting software to maintain a rolling forecast. This allows you to identify potential shortfalls early and plan accordingly.
- Monitor inventory levels closely: Regularly review inventory and warehouse stock to ensure working capital is not tied up in slow-moving items. Adopting a leaner inventory approach can reduce costs and improve cash flow.
If cash flow pressures are impacting your business, our team can provide tailored advice to improve cash inflows and manage outgoings more effectively.
