Cash flow is basically the money that comes in and out of the business in the form of income and expenses. Using cash flow management and forecasting, you can help steady cash flow activity, allowing you to meet your commitments as they fall due and begin planning for spending money in the future on items such as property, plant, and equipment; you will then be able to see when money will be required for investing.
Some preventative methods to potentially overcome a cash flow crisis in your business include:
• Set your credit terms carefully and make sure you and your clients are 100% clear on what they are.
• Make sure your debtors pay quickly and on time. Don’t allow them unreasonably long time frames to pay and don’t hesitate to ask and apply pressure for what your business is owed.
• Seek extensions on money that your business owes until your cash flow is positive once again.
• Identify and remove any issues that are impacting your cash flow.
• Use finance products effectively, such as low interest loans, business overdrafts and hire purchase agreements.
• Do not incur any penalties. Fulfil your ATO and other business obligations on time to prevent your business having to fork out unnecessary cash.
• Most importantly keep your hands out of the cash register!
At The Quinn Group we do much more than just ‘crunch the numbers’ – we are here to help you grow your business. Our highly trained accountants and bookkeepers aim to add value every step of the way by providing strategies to reduce expenses, increase revenue and minimise taxation. If you would like to speak to one of our accountants about improving your business cash flow, please submit an online enquiry form or call us on 1300 QUINNS (784 667).