Effectively managing their cash flow is something many small businesses struggle with. In the early months of running a business, it can be especially challenging to keep track of your cash flow, but getting it wrong can be incredibly detrimental. Keeping track of expenditure can be a big issue for fledgling companies, and waiting for payments to start rolling in can exacerbate the situation further. Research shows that cash flow issues are the most common cause of new businesses failing. So, understanding how cash flow issues can be avoided is need-to-know information for every business owner. If you are looking for some pointers to help you keep your cash flow under control, the following tips should help:
Avoid Invoicing Delays
When you are busy running your company and trying to keep up with your many daily tasks, it can be difficult to keep track of invoices. When you focus your attention on getting your jobs done, invoicing your clients can sometimes be overlooked, so ensuring that this does not happen is crucial. Delays in sending out invoices will inevitably lead to payments being received late. This scenario spells out bad news for your cash flow and needs to be avoided.
Getting into the habit of sending out invoices as soon as a job is complete will help lessen the chances of you being paid late and potentially harming your cash flow. It is also crucial to set out your payment terms on your invoice so that your clients are clear on when they need to pay and that if they pay late, there could be a late payment charge payable. You could even make use of invoicing software to make the process as simple and straightforward as possible.
Make it Easier to Receive Payments
The best way to receive your payments fast and with minimal hassle is to choose a POS that allows you to accept payments from anywhere. Using a virtual POS is an excellent way to process payments efficiently and quickly so that you receive your money immediately without frustrating delays for both you and your clients. With an easy-to-use, reliable POS, you will be able to get on with running your business without worrying about how and when you will be paid.
Monitor Your Accounts Carefully
Keeping on top of your accounts and tracking them carefully is essential to stay in control of your cash flow. Setting aside time each week to check that invoices have been paid and to monitor your incoming payments versus your outgoings will ensure you are always aware of what is happening with your money.
Avoid Overcommitting your Funds
If your business is performing well and seems to be in demand, it can be tempting to start thinking about expansion into new locations and taking on extra staff. However, the decision to expand is never one that should be made quickly. Growing too fast could put your entire business at risk and seriously impact your cash flow. Playing it safe and ensuring you avoid overspending is often the best way to maintain a healthy cash flow and a successful business.