SME Owners – 25 ways to boost your cashflow

SME Owners – 25 ways to boost your cashflow

A solid financial footing is essential for all businesses and cash is still king for most small businesses.  Is your cash flowing only in one direction? It is a common problem – particularly in the first three years of trading. Implement as many of the measures below as are relevant to you and watch your company’s financial position improve beyond your expectations.

Cash Flow Management – 25 Ways to Boost Your Cash Flow

Money In

1. Invoice at the earliest opportunity.

2. Change your payment terms – reduce period of payment of your invoices from 30 days to 14 days.

3. Utilizing corporate tax software put money allocated for corporation tax and VAT into a high interest & instant access account.

4. Offer a discount for fast payment – 1 or 2% would be enough.

5. Increase prices on low margin goods or services.

6. Sell off under used assets and receive a cash injection – old computers, outdated mobile phones etc.

Financial Control

7. Monitor stock closely and only order what you need – don’t have funds tied up in stock that isn’t selling quickly.

8. Structure your debt properly and secure the lowest interest rate possible on all of it.

9. Credit check new customers before beginning work for them.

10. Chase late payments automatically using software or set up a regular process; email, phone call and then written letter etc.

11. Use a debt collection agency when the debt is overdue – use with caution.

12. Review your debts regularly and set cash collection targets for yourself/your credit control team and pre-chase invoices just before they are due.

13. Lease rather than buy when appropriate.

14. Set credit limits for customers and stick to them.

15. Diversify your client base – spread debt across a number of clients and industries.

16. If your PAYE/NIC comes to less than £1,500 a month then you can arrange to pay quarterly rather than monthly.

17. Payment of bills generally by BACS gives you more control of when transactions go through your bank account compared to cheques.

Money Out

18. Change your payment terms – extend the payment period of your supplier invoices from 30 to 45 days .

19. Don’t pay all your bills the moment you are notified of them. If you are VAT registered consider moving to completing your VAT returns online. This gives between 7-10 extra days to pay and it speeds up refunds.

20. Barter for goods and services and pay for them ‘in kind’.

21. Use a company credit card’s interest free credit period to enhance your cashflow.

22. Set up payment plans rather than pay off all outstanding amounts – agree them with your suppliers.

23. Purchase essential equipment and services online – it will be cheaper.

24. Depending on your industry consider running a second shift/night shift rather than moving to bigger premises.

25. Start paying PAYE/NIC electronically through BACS. This allows you until the 22nd of the month or quarter to pay it, rather than the 19th.

We hope you find this information useful.

Kind regards,

Marketing Fundamentals Team

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