Tips for Managing Cash Flow When You Need It Most

Cash flow... It’s one of those things that can make or break your business, especially when times get tough, and it doesn’t make a difference if you’re launching a new project, waiting on overdue invoices, or dealing with an unexpected cost - cash flow management can be a real problem and it can cost you a lot more than just money in the end. So how do you keep things moving when funds are tight? Here are some excellent tips for managing cash flow when you need it most that are sure to help; keep reading to find out more.

Know Your Numbers

Let’s start with something really simple but something that’s often overlooked - knowing exactly where you stand when it comes to your numbers. That’s why it’s so important to look not just at the big figures, but to know even the smallest of details; look at your regular income, fixed expenses, and all the variable costs in between with the goal of understanding exactly what’s coming in and out.

Creating a clear picture of your cash flow means you’re less likely to get surprised by unexpected expenses, so set aside some time each week to look at your cash flow projections and you’ll be in a much better position. And the great thing is that you only need a few minutes to do it with a good spreadsheet or a cash flow app.

Prioritize Your Payments

Not all bills are the same as the others, and when your cash flow is stretched, it’s wise to make a list of priorities that are non-negotiable like your rent or utilities, for example. It’s also good to know which suppliers might be flexible when it comes to payments so you know who to talk to if you need a bit of breathing room but still want to keep your business running as smoothly as possible.

When you prioritize your payments, you can direct your limited funds to the places where it’s needed most, and that means you can keep going until the time when your cash flow improves (and you’ve always got to be thinking ahead and working out how to make that happen, of course).

Consider a Short-Term Loan

Sometimes you need an immediate boost when it comes to money, especially if you’ve got a plan to make more money and you need some capital in the meantime, and that’s where short-term loans can be useful. There are all kinds of different loans available, and as long as you’re aware of the repayment terms, the interest, and the penalties, getting one isn’t something to be worried about - it could be the thing that saves you when it comes to a quiet time for incoming payments.

There are even specific loans for specific activities, so it’s wise to make sure you’re getting the right thing. A bridging loan, for example, is generally used when buying property, which can be a great investment for a business (or individual), and it literally bridges the shortfall for when you need to pay something (in this case mortgage payments) and when an expected payment will come in. Getting a loan that can push your business forward in a way that wouldn’t happen otherwise can be a smart move.

Invoice and Follow Up

When you’re providing goods or services, staying on top of your invoicing can make all the difference, and you’ll want to make it easy for clients to pay by sending clear, professional invoices as soon as you can once the job is done or the goods have been delivered. The sooner you send an invoice, the sooner you’ll get paid (or at least, that’s how it should work, and in reality, how it often does work).

It’s also a good idea to set up automated reminders that go out just before the bill is due to be paid - a little prompt via email or text can be useful to the client, as they’ll know you’re on top of your finances and that you’re going to miss their payment if it doesn’t come in.

Plus, if waiting for clients to pay is a regular issue, what about offering early repayment incentives? They could get a small discount for paying within a certain amount of time, and that could be the nudge the client needs to settle their invoices more quickly, which is great for your cash flow. And of course, you’ll need to set some clear payment terms so they know when the bill is due to be paid in the first place - net 30 is usual for a business, but you can choose any terms that suit you (and that are fair).