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Think of cashflow as the lifeblood of your Business. It’s your lifeline! Without a healthy cash flow, your Business won’t operate effectively or, in the worst-case scenario, cease to function. 

Your cashflow needs careful and diligent management, even when your sales are good. Mastering cashflow management is key to having a thriving, successful Business. 

Here are 3 Top Tips to help keep your cash flowing. 

Tip 1: Understanding your cashflow statement is critical. This report tracks the movement of money (transactions) going in and out of your Business. It reveals if you are generating enough cash to cover expenses.  

Examine your statement: Determine: 

• Is the Business generating enough income from its core business activities? 

• Financials – how much cash is going toward debt repayment or funding your Business? 

• Investments – are you spending too much money on other investments or equipment? 

Tip 2: Treat accounts receivable (money owed to you) as a priority. That is, speed up your payment collection methods and, importantly, chase up late payments. The ideal is to avoid late payments as they can disrupt your cashflow streams. 

How to get paid faster. Be proactive. 

• Issue invoices promptly. Generate for customers as soon as the work is complete or conditions are met. 

• Establish and set clear payment terms. E.g., Payment due in 7 days; payment on delivery. Ideally, limit or be selective when offering 30-day due cycles. 

• Automate payment reminders. Technology systems can generate friendly reminders and overdue prompts. Bring-ups and tags can help monitor your receivables. 

• Offer incentives. Early payment incentives can benefit both parties. Paying ahead of time and receive 5% discount can entice clients to act sooner. 

Tip 3: Manage expenses wisely. Regularly reviewing your spending is crucial for maintaining positive cashflow. Always look for ways to cut costs without cutting or sacrificing quality. 

• Always consider and act with caution and deliberation. Avoid impulse buying or offers that are too good to be true. Stick to your Budget and Business needs only. 

• Subscriptions. Do a review. Cancel unused services or software to reduce recurring expenses. All these costs add up. 

Blackburn Accounting provides a broad range of services, including Cashflow Management, Family Business Management and Business Development. We offer an individualised service to help you and your Business.