7 steps to improving your cash flow

by mike tombs
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Did you know that more businesses fail because of cash flow problems than profit problems? Don’t let yours be one of them. The problem with cash flows issues is that they can creep up on us. If you are only seeing your accountant once a year, you don’t have the opportunity to react in time. If you are constantly monitoring and reviewing your business and its systems, you are less like to fall into a cashflow crisis.

With our Build Your Business Better support system we can help you to improve your cash flow, but to get you started here are 7 steps to help to improve your cash flow.

Step 1 – Build Your Business Vision Every business owner must have a vision for his business be it large or small. A vision is there to inspire and motivate, it is your vision for your business.
Make it loud. Have it written in bold, large letters. Post it where everyone can see it as it’s vital for every employee of the business to know the direction of the company and what their goal is.

Step 2 – Define Business Divisions and Set Responsibilities
Construct an Organisational Chart
When you construct an organisational chart don’t make it too complicated, keep it simple.
• Define Responsibilities
Each department and section within a company or business must have defined roles in order to generate a positive outcome for the business.
This rule applies to everyone within each department. Be exact in allocating job roles and make sure that all of your team members are aware of their responsibilities. This will benefit everyone within the organisation: the workers, the managers, and ultimately you!
• Heading in One Direction
It’s vital that you and all the people that make up your organisation know what goal you are heading to. Heading in one direction promotes unity within a system and improves the chances of success.
Unity is not always easy to achieve. Start with a soft approach to anyone who is struggling: talk to them. It’s surprising what you will achieve by having a heart to heart talk with the staff member involved. Sometimes it’s just a matter of educating them about your expectations, and with everyone shooting for the same goal, your business will be a truly amazing company to lead and work for.

Step 3 – Receivables – Collect What Is Yours
The quicker you get paid the better. Why not collect payment in advance? Or at least collect right after delivery or completion.
Don’t wait for your “uncollectables” to pile up.

Step 4 – Keep Your Stock Under Control
Too little stock will cause interruptions in operation. On the other hand too much stock will cost you the price of holding and storing it. A careful balance is important.

Step 5 – Cut Costs and Reduce Expenses
In other words, save more and spend less. Seemingly obvious but surprisingly tricky.

Step 6 – Learn How to Charge More
Don’t undervalue your business. Increase your rates!
But learn the strategies first as you don’t want to price yourself out of the market.

Step 7 – Learn How to Collect Your Money Faster
Review your current terms and look at how you could change them.

If you want an accountant who will help you implement changes in your business, so that you have a healthy cashflow why not call us today on 01905 21411. At TLA services we understand that businesses are about more that the bottom line.

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