Maintaining a healthy cash flow requires more than strong revenue. Improve your small business cash flow by implementing five simple cash flow rules.
Five steps to better cash flow
The key to better cash flow is getting your invoicing right, by invoicing customers as soon as possible and using tools like Xero’s invoice reminders to move payments along.
That said, there are a few other simple rules you can apply to manage your cash flow and get your invoices paid even faster:
- Maintain Accurate and Up-to-Date Financial Records – Accurate bookkeeping allows you to clearly understand your financial position and make informed decisions.
- Do not be too lenient with your customers – You can be direct and still polite, but do not hesitate to follow up overdue invoices. Monitor your receivable closely and act sooner rather than later.
- Simplify Your Accounting Processes – Having a good accounting system provides clearer insights into cashflow and overall business performance. We can assist you in implementing tools that make this process easier and more efficient.
- Keep your business and your professional finances separate – This is essential to understanding your true cash flow position. Mixing your business and personal finances can leave you uncertain about business performance.
- Build a cash reserve – Be prepared for unexpected events and take advantage of opportunities when they pop up by building a cash reserve.
First you want to get your invoicing right. Get into a habit of sending invoices quickly. Then follow the steps above to collect revenue and keep your finances organised.
If you need support managing your cash flow or setting up better invoicing systems, we are here to help. Get in touch for guidance that aligns with your business goals.
