CASH is KING – 7 easy steps to improve your cash flow now!
Lan Nguyen, Chartered Accountant
I saw a couple in their 30’s working crazy hours building and growing their business. But at end of each month they still seem to struggle paying down their debt and bills. After paying GST, PAYG, wages for employees, income tax, superannuation, insurance and all business expenses…not much cash is left in their pocket. They are also time poor and don’t even know what their profit is for the business if you ask them – does this sound like you?
We all know that cash flow is the lifeblood of any small business. So what are the secrets to improve cash flow? Here are seven simple ways you can do to boost your business’s cash flow today.
1. Create a monthly upfront payment or instalment plan. Once the client signs up, invoice them and do not commence working on the job until you have received 1st instalment of payment. Of course explain to your client in advance of the process, so that there are no surprises.
2. Check your invoicing details are correct, in particular bank accounts so that your customer can easily pay you and pay you quicker.
3. Ask your supplier for a discount if you pay early. No harm in asking. Also check with your supplier if there are any incentives for paying earlier or a bulk discount is you pay in advance for the year.
4. Pay your supplies only when it’s due, not earlier. You can put payments on credit card as much as possible to temporarily improve the cashflow of the business.
5. 
Reduce you credit terms down to 7 to 14 days. I see some businesses offer 60 days free credit to all their customers and then use their business overdraft that charges them interest. It would be better that your reduce credit terms. Even perhaps provide some sort of incentive if they pay early. This incentive should be less than the cost of the interest on the overdraft, so you will still come out in front.
Follow up your overdue customers on a regular basis, by sending monthly statements. These serve as a summary and reminder of their outstanding bills and of the payment terms. Your suppliers are also business owners, so they are busy people, so you need to remind them.
6. Choose an online invoicing system, such as Xero that would automate your payments so that you can receive payments quickly online. Another feature of Xero is its online invoicing and billing set to schedule send, this allows us to manage billing. Once payments is made, it links automatically into the sales ledger.
7. Minimise you taxes for 30 June 2014, by seeing your accountant a few months before 30 June 2014 for tax planning. Sit down with your accountant to discuss ways you can reduce your tax bill. Some of the strategies that we have advised are clients that can instantly reduce thousands of dollars and return cash in their pockets.
Final Thoughts
In closing, I’d encourage you to think how you can implement these tips today into your business to improve your cash flow. So start today. Follow the principles above and enjoy putting them into practice.
If you want to go to the top of the list for a “Tax Planning” meeting – CONTACT us today at http://successaccountinggroup.com.au.
Written by Lan Nguyen, Chartered Accountant and Wealth Adviser from Success Accounting Group.
About Lan Nguyen
Lan is the Founder and Chief Strategist at Success Accounting Group, Melbourne based CA firm. In a matter of short 8 years she has built up a reputable Chartered accounting firm with 3 offices and a team of 6 professional accountants and support team members. Her mission is to provide Innovative and Strategic Financial advice to help her customers make smarter financial decisions today for a brighter future.
Success Accounting Group is for established business owners who would like help to grow a sustained business. As a business owner you understand what drives your business success with our accounting team taking care of the rest.
Success and Wealth
Success Accounting Group Pty Ltd
Oakleigh, VIC, 3166
