Small businesses live and die by cashflow – it’s your lifeblood as a business owner. With several Inland Revenue bills to pay around this time, it’s the perfect opportunity to drum up a little extra money. Here are six quick ways to help improve your cashflow:
1. Chase those outstanding invoices
Follow up on invoices that need to be paid – send emails and call your customers and try to get that money in.
2. Change your payment terms
Even if it’s only for new customers, reduce your payment times and think about introducing part payments up front. One of our clients who makes e-learning modules recently switched to 30% upfront, 60% on delivery and 10% on completion of all the changes – she’s no longer waiting for a client to finally sign off before she can get paid after months of work.
3. Make it easy for your customers to pay you
Can you sign your clients up for direct debit payments? Can you accept credit cards? Is there a prompt payment discount that would help get the money in sooner? Consider all the barriers that might prevent your customers from paying you and see if you can go some way to breaking them down.
4. Analyse your regular payments
We’ve all forgotten to cancel subscriptions – it’s so easy to do. Make sure your company isn’t paying outdated subscriptions, paying too much for utilities or paying for online software that’s not good value. Shop around and see if you can cut your costs.
5. Put your prices up
If you can put your prices up, this is the best and easiest way to boost your business’s income. Investigate what your competitors charge and don’t underrate your skills – this is so common with Kiwi business owners. We have many clients who think that because they’re small or their overheads are low, they can’t charge much. We help them see the value they provide, and how rare this quality can be in a small country like New Zealand. You’re worth it!
6. Analyse and forecast your cashflow
Sort out your cashflow before it becomes critical by first knowing where your cash is coming from and what you’re spending it on. Like your personal finance, knowing what you earn and how you spend it is vital for accurate budgeting. Then we can help you create a cashflow forecast so you’re not left floundering when you need to pay your GST or provisional tax. Forecasting your income will help you manage your money and prevent cashflow problems from slowing down the business.