Managing cash flow is one of the biggest headaches of small business owners, but it doesn’t have to be this way.

So you’re running a small business and wondering why you’re paying too much tax or don’t have enough money in the bank account, yet your accountant is telling you that you’re making money – supposedly, you say! Sounds like your problem is cash flow!

Here are 5 tips that have helped our clients put more money in their pocket.

1. Ensure you are using an online accounting software solution such as Xero so that your accountant, bookkeeper and financial adviser can all see what is going on within your accounts – transparency is paramount to running a successful business. By allowing your professional team that you have around you, access to your accounting system and having it reconciled on a daily basis you can identify those issues that might creep up on you otherwise. Weekly or Monthly check-ins to ensure you are hitting your goals and keep you on track really do work and give you that sense of achievement towards achieving the bigger goals.
2. Learn to put together a cash flow and budget, and ensure that is regularly updated – monthly at the least. I update mine weekly. You can do this by working through what you have spent by category, grouping the smaller expense categories together so you can see trends and projecting out by month for the last financial year. Copy it across for this financial year and then modify where you have made changes or have had increased or decreased costs. Have you changed or modified your suppliers, put on new team members or increased their salaries, these all need to be factored into the right period and projected out to give you an accurate picture. Do the same for income that you estimate will be coming in, break it down into broad categories that will then help you see any peaks or troughs, any particular area of revenue that has dropped and will help ensure that you know in advance where there may possibly be a change in your expected income.
3. Revisit existing fixed charges at least annually, including your IT, internet and phone, power and utilities. You might be surprised by how moving providers or threatening to do so will help save money or provide you with bonus no charge periods.
4. Outsourcing of services that you currently perform in the house; have you recently reviewed your efficiencies when it comes to running your business? Are you doing things like marketing or preparing documents in-house that is taking you twice as long as being able to outsource it to a specialist who can do it more efficiently al half what your hourly rate is. On the other side you might need to rationalise who you are outsourcing to, are you getting the best deal for what you are paying, when was the last time you reviewed the services and contract.
5. Better use of technology such as Microsoft Teams, facetime or zoom so that you can reduce your travel time to meetings and therefore slash your vehicle and travel costs. Review how you are communicating with your clients and suppliers by using email and SMS, Over postage or couriers. All those express post envelopes and printing can add up over time, do you have electronic means of ensuring that clients can sign the paperwork, it can certainly help put the dollars back in your pocket.

It’s all about keeping an eye on your finances and where you’re spending your money, making some small changes that can ultimately make such a big difference to your cash flow. The sum of many small changes can be far greater when added together and enable you to put more money into your pocket to help fund a lifestyle either now or down the track when you get to enjoy the fruits of what your small business has provided for you and your family.

This article first appeared in the Your Best Interests Magazine Vol 1 | Issue 12. You can see the article here…

Are you having problems managing your business cash flow? Contact the JBS Financial team for help!