It’s all very well to be managing your cash, but improving your cash flow can bring considerable benefits to your business. Deciding to look at the way you currently manage your cash is a good start – and it makes sense to look into professional bookkeeping services where your cash flow is under constant scrutiny and changes can be made proactively, helping to keep your business healthy.
What does a bookkeeping service do?
Bookkeeping does what it says on the tin: it keeps your ‘books’ or your financial records in good order so that you always have a clear, up-to-date and useful view of your business’s financial status. For small businesses, bookkeeping can be a difficult thing to keep on top of: many business owners don’t have the detailed financial awareness to do everything required, or simply don’t have the time to do it regularly.
That means that you might be making decisions based on a best-guess about your current cash, stock or invoice positions, and that can be dangerous.
A bookkeeping service means that your financial records sit with someone who knows what they are doing and has the time to devote to keeping your finances up to date. It means there’s someone who can see where improvements could be made that release more cash into your business or help it become more efficient – reducing spend, for example, that has a positive impact on profit margins.
What improvements can you make?
There are a number of seemingly small changes you – or your bookkeeping service provider – can make to improve your cash flow. These include:
Better debt chasing – your cashflow suffers when your invoices remain unpaid. And yet you can often get payment with just one chase. If you don’t have a procedure for doing this, it’s worth putting one in place. Your bills will get paid faster and you’ll have more cash in the bank to help with future planning. Small businesses often find that their clients respond better to a third party – like a bookkeeper service – chasing for payment than if they do it themselves.
Consider payment plans – depending on your product or service, you can improve your cash flow by requesting smaller, regular payments rather than a single lump sum at the end of the transaction. Customers who buy from you regularly might consider a payment plan. This means they can budget and you can have a constant trickle of cash into your account.
Build a good relationship with suppliers – part of managing your cash flow is keeping an eye on what goes out as well as what comes in. Building a good, open relationship with your suppliers means you can negotiate prices and payment terms, which in turn can have a positive impact on the cash in your business.
Look for cheaper alternatives – much of your outgoings will be spend on utilities, including things like your broadband and phone provider. You can always get a cheaper option by switching to someone new. This frees up more cash without compromising on the essentials.
Find smarter ways to do things – as any small business bookkeeper will tell you, finding operational efficiencies can help to release cash. They can also give you more time back in the business itself which in turn allows you to focus on more sales which produce – more cash. This might include investing in accounting software to speed up your bookkeeping and tax processes, or outsourcing some tasks to a professional who can manage them more easily and with more speed. So whilst you may have an outlay for the support or the technology, you will save time, become more efficient and improve your overall cash flow.
Check customer credit history – there’s nothing worse than taking on a customer and only discovering they can’t pay when you put the bill in. Instead, for orders above a certain value, carry out a credit check to make sure your customer can pay. This is standard procedure for many businesses, and reliable customers won’t be offended. In terms of time, this is a task that, if you choose to outsource to a virtual bookkeeping service, can be done for you whilst you concentrate on finding your next paying customer.
All these small fixes can help you to improve the cash flow in your business. A small investment in regular bookkeeping services means you can be confident that someone is always on top of your finances, looking out for ways to do things better and helping you to stay financially healthy. If you’re short on time and need bookkeeping help, why not call us on 0800 994 9016 or use our contact form in the menu above?