You’ve had a really great meeting with a new potential client and you’ve sent your proposal. It’s in the bag, right? So what’s the harm in putting down a deposit for that new laptop you’ve been coveting? This new project will more than cover the cost…
You’re scrolling through your social media feed and spot an ad for a cracking new course that’ll help you up-skill. It costs a smidge more than you can afford but hey, you have to invest in your business if you want to grow. You go ahead and click that ‘sign up’ button.
When running a business it’s all too easy to lose track of your finances. A little too much optimism about your future sales, or being a little too ready to invest without considering the timing or the potential ROI, and you can find yourself in a cash flow crisis.
And once you’re having problems with your cash flow, crawling your way out can be a struggle. Luckily, adopting the following habits will not only help you out of a current cash flow crisis but will help keep your future finances on a much more even keel too.
Keep on top of your invoices
If you’re running a service-based business, one of the best things you can do is to get into the habit of taking a deposit before starting any new project.
Not only does this ensure that you’re not completely out of pocket if a client suddenly ghosts you, but it means that your cash flow is more evenly spread out throughout the year.
While you’re adding that 50% deposit clause to your client contract, make sure you lay out your payment terms as clearly as possible too. That way everyone you work with knows exactly when you’ll be expecting your fees.
And don’t think you can sit back and relax just because you’ve sent out your invoice. One of the main reasons business owners find themselves short of cash is because they treat a sent invoice like money in the bank.
Tough love time: it ain’t! Your job isn’t done until that invoice has been paid.
Increase your chances of prompt payment by setting a follow-up reminder for regular intervals after the invoice due date.
Most unpaid invoices are down to forgetfulness so an email sent a week or so after the due date should be enough to jog your customer’s memory, but don’t be afraid to pick up the phone if you’re still waiting for payment a few weeks later.
If cash flow issues are causing you stress, it might be time to look at your overheads to figure out where you can save some pennies:
Carefully monitor stock levels to make sure you aren’t over-ordering.
Conduct a regular expenses audit to see where you could cut back. For example, have you done a recent comparison of energy suppliers? You could save a fortune by switching.
Are you spending money wisely? Consider whether you’re getting a decent ROI on your expenses.
You might find that you’re over-spending every month on membership to a networking group whose events clash with your other commitments or paying for an app you never use.
Automate your accounts
You can’t avoid a problem if you can’t see it coming.
Automating your accounts is one of the simplest ways to keep on top of your cash flow situation. With a cloud accounting solution like Countingup you can see, at a glance, what’s happening with your business finances.
So you’ll know exactly what’s going out, what’s coming in and you’ll have a real-time idea of exactly how much tax you’ll owe HMRC, making it easier to plan your expenses.
No more guesswork — you’ll know immediately whether you can afford to sign up for that new course or buy that shiny new laptop you’ve had your eye on.
The added bonus is that dealing with your invoices is also super easy with Countingup since everything is automated, including payment reminders.
Keeping on top of your cash flow really can make or break your business so don’t wait until you’re in the midst of a crisis to fix your finances.
Most cash flow issues can be prevented by a bit of forward-planning and these three strategies are the ideal place to start.
If you want to try Countingup’s automated bookkeeping and invoicing for yourself, jump right in, you can open an account here — if you’re selfie-ready, have some ID to hand, and a spare five minutes, you can do it right from your mobile!