As any small business owner will tell you, managing cashflow is the most important part of running a business. You have to be certain that you have enough cash coming in the door to pay staff wages and suppliers.
What a lot of people don’t understand is that even profitable businesses can run into trouble with cash levels and if you don’t pay close enough attention, your business could fall into insolvency.
You may have heard the old adage of;
- Rule number 1 in business is that cashflow is the most important part of your business
- Rule number 2 in business is that cashflow is absolutely the most important part of your business
- And rule number 3 is that you always refer back to rules 1 and 2!
Remember, the simple rule of thumb is that you must be bringing in more money than you are paying out. You should also keep an eye on how profitable your business is because lots of firms sell lots of things but forget that each individual item has to make a profit.
Two ways to manage your cashflow
- Bring more money into your business through increased sales
- Reduce your company overheads and outgoings
No two businesses are alike which means that every business will have a different requirement in terms of cashflow management and with the advent of alternative finance as a viable option for SME’s, you are spoilt for choice in terms of looking for a funder.
If you are struggling to pay wages or buy new stock because your customers are slow paying your bills, then invoice financing is an option. If your business needs to purchase new equipment such as cars or machinery, then a business loan will be the correct option.
Take a little time to look at our tips on managing cashflow in your business.
- Be more proactive in chasing outstanding invoices
- Employ someone specifically to manage credit control – will be the best investment ever
- Apply for invoice finance to receive cash in advance of your invoices being paid by your customers
- Look for a revolving cash facility – something that will allow you to manage the peaks and troughs of your trading levels
- Implement a business overdraft and if your bank won’t help then…
- Switch your bank account to a challenger bank
- Renegotiate better terms with your utility companies, landlord or commercial mortgage company
Here at A1 Commercial Finance, we understand cashflow inside out and we can help you and your business take control, so get in touch with one of our cashflow consultants by completing the form on the right hand side.