Grow your business, Secrets to success, Ways of working

How to better control your cash flow

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According to Hong Kong businessman Sir David Tang, the three most dreaded words in the English language are ‘negative cash flow’. Regus research has shown that 49 per cent of you think that cash flow is the largest challenge facing start-ups, so here are some tips to help you ensure your liquidity doesn’t dry out.

Plan plan plan

Make a 12-month action plan. While predicting profits is fun, a cash flow diary is more realistic – and the earnings will take care of themselves. Make it crystal clear when payments are due in all dealings with suppliers and clients.

Embrace technology

Use online technologies to create a clear, streamlined cash flow. Take advantage of cloud-based accounting, so you can see your business details on-the-go. Go paperless with email invoices, creating an instant record and reducing the need for filing.

Engineer your income

Make payments into your accounts more predictable. If possible, use direct debits so you know the exact date you’ll be paid. Our research shows that 72 per cent of you dislike late invoice payments so much that you think legal penalties should be introduced to deter tardy clients. If you need to, adjust the clients you’re targeting. Reliable, fast-paying clients may be more valuable than big-name but less regular partners.

Master your outgoings

Keeping attrition low is important to maintaining a sustainable cash flow. While a payroll provider may seem pricey, by taking care of taxes and legal issues they could actually save you money. We’ve found that you don’t believe you’re getting clear enough information on the financial management of small businesses – so get the experts to do it for you.

For short-term gaps in cash flow, consider alternative funding. Many banks partner with businesses that specialise in providing invoice financing or trade supplier payments, allowing you the opportunity to bid for larger projects and take advantage of cash buyer discounts with suppliers.

Communication is key

When you’re tight on cash flow, an expected payment that doesn’t arrive causes serious issues. If you don’t inform your bank as soon as you hit troubled waters, they may freeze your credit, causing lasting damage to your supplier relationships. A quick phone call to your bank manager could prevent any trouble. Apply this logic to all your stakeholders. Swift, clear communication is key – speak to clients, suppliers and creditors about potential payment problems before they happen, and you’ll give your business the best chance of steering back into calmer waters.