As a business cash flow is a major contributing factor to your success. It determines decisions you make which will impact the future of your business, that’s why it’s important to maintain a healthy cash flow.

So how can you ensure you stay out of the red?



1.Keep an eye on your transactions

Make sure you are checking your bank account on a regular basis, at least daily! Being aware of what transactions are coming in and out of your business account means that you know what your balance is, so you know what you can and can’t spend. Keep track of everything going in and out on a monthly basis so you know what to expect at the end of the month. Forecasting your cash flow means that you don’t have to guess what funds are available so that you can make important business decisions quickly and accurately. The most efficient way of monitoring your transactions and ensuring that they are reconciled regularly is through cloud accounting. At Bluebells Bookkeeping we use Xero for our clients which integrates with most bank accounts with the bonus of automatic reconciliation. By using cloud accounting it means you can check your cash flow from wherever you have an internet connection, so there’s nothing to prevent you from making a decision on the go.

2. Audit your outgoings

A great way to cut costs is to audit your outgoings. Most businesses have transactions going out each month that they either; don’t require, have forgotten about or just don’t use the subscription enough to warrant a monthly fee. These transactions may only be small but together they can make a massive difference to your cash flow. You may find that many software providers give you a discount for paying annually instead of paying monthly. This is a good way to save money but make sure you are not leaving yourself short to pay the lump sum, sometimes paying monthly can keep your cash flow healthier.

3. Keep personal and business transactions separate

I cannot stress this enough! Not only does this save your bookkeeper time, it saves you money. The more accounts you use for your transactions the more you will be charged by your bookkeeper. Having a separate bank account for your business is a legal requirement for Limited companies and it means that your accounts can be reconciled much quicker if every transaction coming in and out of the account is business related. Keeping your transactions separate ensures transparency of your business finances.

4. Chase debt

Do you find that you spend a lot of time chasing unpaid invoices?

If you use software such as GoCardless as a payment method your clients will be required to set up a direct debit so no payment is missed, keeping your cash flow nice and healthy. Plus of course it saves you time as you don’t have to invest the time into chasing missed payments. 

Try and avoid being too lenient with people who are late payers, you will find that they take advantage of the situation. Instead, consider introducing late payment fees, or offering a discount if they pay earlier than their due date. 

5. Agree flexible payment terms with suppliers

Not only do you need to build great relationships with your clients, it’s important to develop relationships with your suppliers too. Agree payment terms with them from the outset, the longer you have to pay your invoices, the longer your money stays in your bank, keeping your cash flow nice and healthy.

If you’re struggling with your cash flow or need some support with your cash flow forecasting then please get in touch, we would love to help with the development and growth of your business.