Cash flow is the lifeblood of every business, and when it runs dry, things can go south pretty quickly. But with a few smart strategies, you can keep your cash flow strong and steady, giving you the room to grow and tackle new opportunities. Here are five effective ways to keep your business in a strong financial position.
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5 Cash Flow Hacks for Business Owners
1. Have a Plan to Manage Outstanding Payments
Nothing drains cash flow faster than unpaid invoices. To keep things flowing smoothly, set up a clear and consistent system to follow up on outstanding accounts. A few effective tactics include:
- Sending automatic reminders for overdue invoices
- Giving a friendly nudge via phone or email after a set period
- Pausing services if payments exceed a certain timeframe
Having a structured approach helps reduce late payments and keeps your cash flow steady. After all, a business needs cash—not IOUs.
2. Sell Old Stock or Unneeded Assets
Excess stock or outdated assets taking up space? Turn them into cash! Whether it’s old equipment, office furniture, or surplus inventory, consider selling them off to give your cash flow a boost.
While you may sell your excess stock at cost or even below cost, it’s not making money sitting on your shelves collecting dust. Get rid of it, learn from it, and move on. This is an easy way to free up space while getting a bit of extra cash back into your business. It’s a win-win for tidying up and topping up your bank!
3. Stay Prepared for Tax Time
One surefire way to land in hot water is by finding yourself short at tax time. Avoid this by setting aside a portion of your revenue each month specifically for tax obligations.
I highly recommend opening a dedicated tax savings account and transferring 15% of your total income from your main trading account into it regularly. A little planning ahead means you’ll never be caught out by a tax bill, and you can focus on growing your business instead of scrambling to cover liabilities.
4. Keep Business and Personal Spending Separate
Keeping personal and business finances separate is essential for a healthy financial foundation. Each should have its own budget, profit and loss, and cash flow forecast. Mixing the two can lead to confusion, issues, and missed opportunities for growth.
If you find yourself “robbing Peter to pay Paul,” it’s time to revisit your financials on both sides and address any imbalances. Remember, your business isn’t your best buddy—it’s more like that annoying sibling you need to manage carefully to ensure everyone stays on track!
5. Forecast Your Cash Flow
One of the most powerful ways to manage cash flow is by creating a forecast. A cash flow forecast helps you see where your money is going, anticipate slow periods, and plan accordingly. Be sure to consider periods Christmas and school holidays, or seasonal impacts like winter if you have a retail business in a beach location.
Additionally, think worst-case scenarios—both for income coming in and expenses going out—because the world isn’t always on our side. With this level of visibility, you can make proactive decisions instead of being caught off guard. Whether you’re just starting out or running a well-established business, a cash flow forecast is an essential tool, and we’re here to guide you through the process if you need help.
Need a Hand with Cash Flow, Tax Planning, or Forecasting?
Don’t let cash flow challenges hold you back. Our team is here to help you put together a solid strategy for managing, forecasting, and improving cash flow. Drop us a message or give us a call to get started!
