As one of the main reasons why businesses fail, poor cash flow can be a very serious issue in a crisis. Not to be confused with profit, your cash flow revolves around where your money is tied up, and although your business might be performing well, if your profits are held in stocks then you won’t have adequate funds to meet financial commitments.

If you find your business in a cash flow crisis, all hope is not lost. There are a few ways you can help to manage this temporary situation so that it doesn’t fester and become a permanent problem.

Have A Cash Flow Forecast

It might sound simple enough, but there are many small businesses which don’t consider this an important area for financial forecasting. Begin with a simple spreadsheet that lists your proposed income and costs for the next 12 months so that you can keep track of upcoming shortfalls.

Be Vigilant With Payments

Establish a strict set of payment terms with your customers and be vigilant in ensuring they stick to them. Most businesses allow 30 days maximum for payment, so this is a good standard to use. Send out your invoices promptly and follow up late payments the day they become overdue. With an understanding of your customers’ usual payment dates, you’ll be better equipped to forecast your own cash flow.

Stay In the Good Books with Lenders

Almost every business has required financial assistance at one time or another, whether it’s to get your company up and running or help with an unanticipated rough patch. By remaining upfront and honest with lenders, and making repayments as promised, you can keep them on your side for any future problems you might have.

Assess Your Outgoings

Consider all of your monthly, quarterly and yearly costs such as electricity bills, phone accounts, and tax bills, and adjust the payment terms to something more flexible. For many, a cash flow crisis can be solved simply just by making a few small cuts to luxuries around the workplace and striking some deals with your service suppliers.

Seek Professional Help

If your Melbourne small business is in need of financial advice to get their cash flow running, the team at Hart Partners are the right people for the job. With a specialised focus on small business, we can help you get back on track with your goals.

We welcome your call on 03 9600 3220 for a confidential and professional chat about your business’ needs.