Small Business and Cash Flow: Our Top Tips

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As a business loan expert in Australia, we understand the challenges that small businesses face when it comes to managing their business cash flow. Cash flow problems can be a major source of stress and can even threaten the survival of a small business. In this article, we’ll focus on key areas of business strategy to help manage cash flow for small businesses effectively.

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Understand Your Cash Flow

Before you can manage your cash flow problems effectively, you need to have a clear understanding of your current financial situation. This includes knowing your current cash position, your income and expenses, and your working capital. 46% of businesses in June last year experienced a rise in their expenses according to the ABS in their Business Conditions and Sentiments Report. By having a clear understanding of your business cash flow problems, you can identify potential problems and take action to address them before they become more serious.

Budgeting and Forecasting

One of the keys to effective cash flow management is having a budget and a forecast. A budget will help you to plan your expenses and revenue, while a forecast will help you to project your future cash flow. By having both in place, you can anticipate any potential business cash flow problems and take action to address them before your situation becomes dire.

Financial Management

Good financial management is essential for a small business. This includes managing your debt effectively, keeping track of your invoices, and managing your inventory. By managing your finances effectively, you can minimise the risk of cash flow problems and ensure the long-term success of your business.

Invoice Management

Invoicing is a critical part of managing your business cash flow problems. To improve your cash flow problems, it’s important to invoice your customers as soon as possible and to follow up on any late payments. You can also provide incentives for customers to pay early, such as discounts or other rewards.

Payment Terms

Having clear payment terms is essential for managing your business cash flow. This includes setting clear deadlines for payment, providing multiple payment options (such as credit card payments), and providing incentives for early payment.

Inventory Management

Managing your stock effectively can also help to improve cash flow for small businesses. This should include selling any assets you don’t need or rarely use, bundling products and services to encourage additional purchases, and forecasting your stock needs effectively to ensure that you have the right amount on hand and aren’t building up stock unnecessarily.

Seasonal Fluctuations

Seasonal fluctuations can be a major challenge for cash flow for small businesses. By forecasting your cash flow and planning ahead for seasonal changes, you can better manage your cash flow and avoid any potential problems.  This is where a backup credit solution, like an unsecured overdraft can come in handy.  The best solutions only charge interest when you draw on your line of credit so they’re a cost effective when you’re not using them.

Financing Options

There are many financing options available for small businesses, including unsecured loans, overdrafts, invoice finance (also known as debtor finance and factoring) facilities, cash flow lending and other types of financing. By exploring your financing options, you can access the capital you need to manage your cash flow effectively.

Manage your cash flow as a key business metric

Managing your business cash flow effectively is essential for the success of your small business. By understanding your cash flow, budgeting and forecasting, managing your finances effectively with a cash flow lender, and getting the right finance options with cash flow lending, you can minimise the risk of cash flow problems and ensure the long-term success of your business. 
To talk to an expert about our cash flow lending solutions for same day business loans you can contact us here.

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