3 Tips to Improve Your Cashflow
This is a guest post by Cone Accounting
Have you ever heard the saying cash is king? Yes? Well, that's kind of true, CASH [FLOW] is king. If you have not got good cash flow, it could mean that your great business idea could never become a successful reality.
Cash flow is the way your business thrives, which means getting paid on time, paying bills on time and still having enough money for other aspects of the business. But how can you achieve this state of flow?
Well, I am going to give you 3 tips right now...
1. Getting Paid On Time
Getting paid is a crucial one. However, it is most definitely not an easy one. Getting paid on time (sometimes even at all) is what takes up a lot of your time.
So be clear with fees. Being open, honest, upfront and most of all communicate clearly how much someone needs to pay you and by when is vital. I would recommend billing your client one month in advance, or at least a deposit, this way you do not do the work or give the product to your client with risk of no payment.
GoCardless is an app that once authorised will take the money out of your client's account, like a direct debit, on a previously determined date. This takes all the stress out of asking for money.
GoCardless informs your client a few days before it takes the money and tells you if there are not sufficient funds in your client's account.
Automating your invoices to ensure they go out on time is key. You want your client to know exactly when they need to pay you and how much. Automating also saves you time in the long run. It saves you having to create an invoice every month as well, especially if it's for the same amount.
2. Revenue Stream
Multiple revenue streams.
Your cash flow is stronger when you have multiple revenue streams. But this doesn't mean that you need to start a new business in addition to your current one. Simply look at ways you can monetise your knowledge or product.
Passive income is an income stream that requires little attention once set up. For example, you could sell online courses, printableables, or images. Get creative and think of what you could do with your current knowledge and expertise.
A monthly retainer.
It is important to find some way of monetising your business that will give you a set monthly income. Think about splitting your fees into 12 months.
For example, instead of us (accountants) charging a client all at the end of the year, we charge a set monthly amount.
Alternatively, think about upselling your product or service. Is there something you could offer your customers on a regular basis? A product example of this would be a subscription box.
3. Going Paperless
Knowing your finances.
I know shock, an accountant telling you to watch your finances, but hear me out. Do you know how your business is doing by taking a glance at your smartphone? Do you know what money is coming in and what money is going out? Do you know where you have been spending money and how much of it? Can you see all your receipts for your expenses?
No? Well, if not, going paperless, onto the cloud is a great solution.
We love Xero and Receipt Bank for this.
Xero is an online accounting software for small to medium businesses, and Receipt Bank is an online bookkeeping software that integrates with Xero.
Money In. Money Out.
We always advise our clients to do their own bookkeeping for a few months. Why? Because it makes they notice what money is coming in what is going out as well as how regularly and how much of those outgoings are a necessity.
Knowing this can help you organise things like direct debits so that they don't come out at the wrong time. It's all about timing!
By going paperless, you have everything in one place which not only saves you time from losing something important but allows you to see your business at a glance.
Ideally, you should be checking in on your business every day. Just a simple check of how much money is in the business, when and where your money is coming from next and who has or hasn't paid. We know it can all be a little scary and overwhelming but do not stick your head in the sand as I promise that doesn't help.
What to do next?
We know this is a lot to take in, especially if this is all new to you. Start by looking at each element that we have mentioned and see how you can streamline it to help your business.
As a little thank you to Sassy Digital, we would like to offer 5% off any our services when you reference this blog post.
About Cone Accounting
Cone Accounting are accountants for creatives. With an alternative approach to the world of accounting, Cone challenges every stereotype that you may have of an accountancy firm. Cone believes in their customers and their goals and has harnessed technology such as Xero and Instagram to become a new age accountant.
Check out Cone's Instagram here!
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