As a bookkeeper, the team at Pebbles Bookkeeping is much more than a body to simply compile your books. We are a consultative body that wants to help your business succeed, and we do that by looking at various ways your company can do things better and become better organised. One such way that we work with clients is by helping them to get a better foothold on managing cash flow, something that is crucial for small businesses wanting to grow in the new year.
Sending invoices promptly is pivotal to good cash flow management, as soon as a product or service is delivered an invoice should be sent. This helps to develop a habit of sending invoices for payment immediately and getting paid quicker, helping your cash flow to remain healthy.
Here are some key rules you should implement to collect your revenue promptly.
Forget Being Lenient
Small businesses thrive on their customers paying them on time with no delays. When a small business is too lenient it starts to snowball into a cash flow nightmare. Being lenient once leads to a feeling that it can be expected from you in future.
If you constantly bend over backwards to give your customers a break on late payments, it is safe to say that the advantage will be taken in due time. When business is slow, it can be tempting to give your customers a few extra days to make their payments. However, the longer you give them, the less likely they will pay you on time moving forwards. Think about whether it will cause a ripple effect on on-time payments before you decide to be lenient with your customers.
Make Accounting Simple
Cash flow problems mostly get traced back to weaknesses in your accounting process. If the system you are using is too complex to manage your accounts then it can quickly become a liability.
Streamlining the method of how you record your transactions is essential, as is the system for extracting this information. At the end of the day, the more time you have to spend recording and filing your transactions, the more your business is missing your expertise to make it grow in size. Messy accounting leads to all kinds of problems, including late payments and late bills – all of which greatly affect your cash flow.
Learn to Separate Business and Personal
A true headache for small business owners is not separating personal and business finances. When you are a small business owner or freelancer, you may need to use some business cash to make personal purchases,
If you run a small business, you are expected to take both a personal and business approach to managing your finances. You should be setting up a personal account and drawing from that when you need to.
Keep Books Updated
The crucial step is ensuring that your books are constantly updated. This is a crucial piece for managing cash flow. Maintaining clear records means you can easily identify when the business is low on cash and when you should be extracting funds.
Having your books up to date helps avoid cash flow errors which are detrimental to your business. This is where bookkeeping services in Manchester come in handy, as they are experts in keeping your books healthy and in line, giving your the peace of mind that your business is running how it needs to be.
Contact the team at Pebbles Bookkeeping services today to help your business get to where it needs to be.