Do you feel like you are spending too much time working in your business, with nothing to show for it? The figures seem to show you are making a profit but you don’t know where all of the money goes. How can you improve your cashflow and make sure that the funds are available when the bills fall due. Here are some tips –
Set targets
Do you know how much your business needs to turnover in order for you to have the income that you need to live. Do you know what your break-even point is? Many businesses price their products purely based on what they believe others are doing without spending the time to actually calculate what margins are being made on their sales. This is where we can help. We can sit down with you and analyse your fixed and variable costs and help you to work out what profit you need to make in order to meet your comittments.
Manage Debtors
Most of the software available today, such as xero, MYOB and QBO, enable you to send automatic reminders to your customers. If you are doing large jobs, try to implement a deposit up front, or set up direct debits where possible. Automatically issue reminders after 7 days. If cashflow is really tight you may need to look into debtor finance.
Track Outgoings
Reduce Unnecessary expenses. How often do you analyse what you are spending. How many of those monthly subscriptions are getting used. Consolidating costs and reducing unnecessary spending is one of the fastest ways to increase your cashflow. If you are in retail, do you monitor what times of day you may need additional staff. Look at ways to work more efficiently.
Advertising – This may seem like a strange thing to look at doing. Advertising is extremely important, and in times when cashflow is tight, attracting new customers becomes more so. Where are you spending your money on advertising though and where are your clients coming from. If all of your clients are finding you online, the costs of doing print advertising may be wasted. Look at spending your advertising dollars where you get the most returns. Speak with other business owners in similar industries, survey your existing clients and analyse what is working.
Discount old stock – how much stock do you have sitting on the shelves that is not moving. Old stock is taking up space that could be better utilised and chewing up money that could be spent on better things. If you have stock that has been sat there a while, the chances are, the longer you hold that stock, the less value it will hold.
Consolidate loans
How much are you spending on loans and interest? Do you have debts outstanding with the ATO. Look to consolidate loans over a manageable period to balance your cashflow and have a reduced number of commitments coming out during the month.
Create monthly budgets and analyse cashflow
When it comes to preparing budgets and analysing cashflow we can assist with providing visual monthly reports that help you see clearly where your expenses have changed, what you can reduce and how you can optimise your business.
