#84 5 Small Business Cashflow Improvement Ideas
Cashflow is something that is the lifeline for small businesses. Having started out as a corporate tax accountant, I was always trained to focus on the Profit and Loss (or Cash Statement) and the Balance Sheet.
However, cash really is the health check of any business. Your accounts can look very healthy. However, if you don't have cash available to pay for things, then that becomes a big problem.
Because many of us have never been taught how to manage money, it often means that managing money within your business can be equally, if not more, challenging.
There are a number of ways to both track and improve your cashflow. Here are 5 ways that you can do straight away:
- Review your business plan and the goals you have set for yourself this year. Are you on track? If not, what is the cause and how can you get on track?
- Streamline systems you use - review what you use against what you're paying for
- Look at your monthly cashflow - your profit over the prior 6 months and next 6 months to see when you are most profitable and why. Trends can help you to make better decisions about what product or service to focus on promoting. This is like a budget and cashflow statement in one, where you document what you plan to earn and spend, then go back and record what actually came in and went out.
- Make sure you put month aside for tax (GST, company tax, and any other taxes you may be liable for), and super. This also includes any withholding tax and superannuation that you need to pay for your staff.
- Put money aside each month to cover months where expenses are higher, so you don't dig into either profits or an overdraft.
