One of the top challenges faced by small businesses is cashflow management. The business seems busy and there’s heaps of activity going on, yet this doesn’t seem to translate in to a healthy bank account. Sound familiar?
Here are 3 simple tips to help get to the bottom of this challenge:
Understand your numbers – operating a business without having an awareness of your financial information is like driving in the dark without your headlights on. Get clear on what your financials are saying and if this isn’t your strong skill, then get someone in who can help.
Get on top of your timings – making payments, receiving income, monthly commitments, salaries, BAS, Tax, Super…. these all have their own lead time for being due. Understand what payment terms you have for your Invoices, what your supplier terms are, when payments are scheduled and the commitments you have over the coming months. A cash forecast will help with this.
Regular Reviews – reviewing your financial information at the end of a quarter when you prepare a BAS is again driving blind. Each month, prepare and review your Profit & Loss, Balance Sheet and Cashflow statement at a minimum. This way you will be able to make more informed decisions.
These may seem basic tips, yet it’s amazing how many businesses choose not to adopt the processes and find themselves being caught short.
If you want to know more about this, Mentoris are Small Business Mentors in Brisbane and offer assistance to help your business manage their cash position. Get in contact via firstname.lastname@example.org and we’d love to step you through how to manage your cashflow.