Money in versus money out can make or break your business. No matter how many sales you are making, cash flow mistakes can prove very costly, pushing some organisations to the brink of collapse.
By identifying the cash flow mistakes which can set your business growth back, you can set yourself up to avoid them.
Here’s what to watch out for:
Cash flow mistake #1: Not budgeting
As a business owner, the buck stops with you when it comes to budgeting. You need to be across your business expenses on a monthly basis and understand how much is coming in and going out.
Work with your accountant to create a list of expenses so you know how much you need to make to keep your business in the black.
Cash flow mistake #2 Making impulse purchases
Sometimes you need to make a purchase to keep your business up and running but you should always do your research to make sure you are getting quality and value for money.
In some cases, it may make more sense to lease equipment or use asset finance to fund a larger purchase. This can also help with cash flow as your business account won’t take a large hit in one go.
Cash flow mistake #3 Letting accounts go unpaid
Late and outstanding payments can drastically impact your cash flow. Start asking clients to make an upfront deposit or create terms which stipulate interest charges for late payments.
Make an effort to chase down outstanding accounts and avoid doing business with companies that don’t pay on time.
Cash flow mistake #4 Not staying on top of payments
Just as you expect to be paid on time, you should settle your bills as requested. Paying on the due date, or even earlier, can save you from being stung with overdue fees that send money down the drain.
Cash flow mistake#5 Not planning for seasonal ups and downs
Some businesses have their peak during holiday periods while others notice a sharp decline in customers.
If you plan for regular cycles of highs and lows, you won’t find yourself struggling to balance the books during the slower periods.
Similarly, be prepared for the peaks with enough inventory or staff on board and you will be able to maximise your profits and your cash flow.
Want better cash flow? Consider asset finance
Stay on top of your money and avoid cash flow struggles with asset finance from Bigstone Finance. If you have been in business for two years and have a clean credit history, you may be eligible to apply.