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5 steps to boost your business cash balance

Writer's picture: Kubilay OzpalasKubilay Ozpalas

Updated: Jan 15, 2022

Simple strategies you can implement to improve your cash flow



Cash flow is a big area. I’m sure you heard that profit doesn’t equal cash but what does that actually mean?


You may be making very healthy profits but if you have very little cash left at the end of each month, you won’t be able to pay your staff, your suppliers and the tax man. Inevitably, your profitable business and all the hard work will go down the drain. In fact, 60% of small businesses do not survive their first 5 years of trading because of poor cash management!


It is best practice to have at least three months of overheads as surplus cash in your bank and Covid-19 has proved the significance of this.


Fortunately, there are simple steps you can take to make sure you are on top of your cash balance every month and stop your bank balance becoming your worst nightmare.


  1. Invoicing- If project based, take a proportion of the project cost up front and make sure you are billing as you go along rather than issuing one big invoice at completion

  2. Payment terms - offering terms any more than 14 days puts you in the risk of costs becoming due before your customers pay you. Many companies are now collecting cash through direct debit, which guarantees automatic payments.

  3. Credit control - make sure you chase outstanding debt frequently. At a minimum, make use of your cloud accounting software to send reminders to clients when invoices become due

  4. Future planning - cash flow forecasting should be implemented at least quarterly so you know well in advance when you will have cash shortages and plan accordingly

  5. Overdrafts - have an overdraft agreement in place for any worst case scenarios

  6. Tax incentives - Make sure you conduct a pre year end tax planning exercise with your accountant to reduce your tax bill and boost your cash balance at the same time. Things to consider are R&D claims, trivial benefits, spouse shares, pension schemes and personal tax review of the directors

Cash flow forecasting is crucial for any business as it keeps you on track with survival.

Click here if you would like a copy of a cash flow forecast template to give you a kick start.


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