10 ways to improve your businesses cashflow

EFM offers practical advice and recommend steps which you can take to improve your businesses cashflow.

In the meantime, here are a few of our top tips for better financial management:

1. Use financial records: Harness the power of financial data to track and trend. Management reports are useful business tools and if you are unable to produce these, consider getting additional resource. Forecast and use the cashflow analysis to help you prepare for and predict short term needs.

2. Bill early and stage bill if necessary: Send a bill as soon as you have rendered a service or sold your goods. For longer term contracts, arrange for stage billing or, even better, upfront payments.

3.Tighten credit control processes: Make a phone call within one week of raising the invoice to check it has been received, call within two weeks to check it has been authorised and write a letter within 30 days of an invoice becoming overdue. Escalate the seriousness of letters through to legal action if required and you can also claim statutory interest at 8% over base plus costs for overdue amounts. Always keep notes of actions taken and conversations.

4. Avoid invoicing errors: Ensure that payment instructions including your bank account are clearly marked on the invoice. Watch out for excel rounding, VAT number, order details and other such information.

5. Avoid ‘no pay’ or ‘slow’ customers: Be upfront with your customers about your credit policy and terms and understand their internal payment and authorisation procedures. You should only trade with customers with a good credit record.

6. Initiate a regular payment system: Encourage your clients to pay using a direct debit or standing order or by online banking or BACS – this ensures you can use the funds more quickly, minimize the payment cycle and is cheaper in bank charges for you and your customer.

7.Discount: Offer incentives for prompt payment but assess the cost and benefit of this approach and only give the discount if your customer keeps to their part of the bargain.

8.Bartering: Swap your services or products with a customer who has products or services you need. Settlement of invoices is immediate.

9.Keep to budgets: Make sure budget holders keep to budgets. If there are any variances, investigate.

10.Understand your costs – both fixed and variable: This will enable you to make the right cuts, if and when the need arises. You will also need to understand which products are making you money – and which aren’t. Understand which costs are essential and which can wait.

FREE FINANCIAL HEALTHCHECK

Can you foresee a situation where you lack sufficient cash to pay your bills and staff? Do you have customers that are late on payments, making you short on cash but still profitable? A cash flow analysis is an essential tool for every business owner; it can be the difference between staying afloat and losing the business. However, it’s a skill many management teams and business owners struggle with.

We offer a 3-minute healthcheck which will give you a quick indication of the financial health of your business. It will alert you to situations that need to be addressed, giving you a better idea of where your money is, and how to stay in control.

Click on the link below to access our cashflow healthcheck:

efm.uk.com/resources/cashflow-healthcheck/

If you would like to speak to one of our experts please see contact details below:

Mark Davis

☎ 07877 922 791
Mark.Davis @efm - network. c o m


“I have liked everything about EFM, the company has benefited extremely from working with them. Mark has brought a new focus in, relieved pressure from me, and brought lots of new ideas in. I was a bit hesitant at first with new ideas in the organisation, but my 3 fellow directors have embraced it completely. We’ve been using EFM since February, so for 4 months now. I don’t think they could do anything better. Mark’s not just a financial controller, he’s coming up with sales ideas; ways to record sales, and how to bring in new clients. It is financial management but it’s also a business process change.”

R Bullock & Co Ltd

Robert Bullock