Australian Bookkeepers Network
New Year Cash Flow Tips
With the holiday season only just winding down, some businesses experience cash flow problems at this time of year with key customers having temporarily shut down over the Christmas break, etc. Here’s a few handy cash flow tips that I’ve learnt along the way, and that you can use in your business all year round… no matter what industry you’re in:
Variation of Instalments — On the taxation front, consider varying your PAYG instalments if business is not as strong this year as it was last year. Send Invoices out Immediately — For some reason, many businesses have a set routine of sending out invoices at the end of the week or at the end of the month. This unnecessarily delays payment and can cause a cash shortage. When you make the supply or receive the order, send out the invoice!
Minimise Excess Stock — Aim to have just enough stock to meet customer demand and not have your store (if applicable) looking empty. Beyond that, any excess stock is, in effect, tying up your cash. Discounts! Consider offering discounts to early payers. A word of caution though! It’s important to strike a balance between a reasonable discount and your desire for early payment. Offering sizeable discounts for money that is due a few days later will end up causing its own cash flow problems. As a general rule, keep discounts small and require the payment well in advance of the due date.
Charge Deposits — Consider charging deposits for significant orders. Not only do you get cash up front and guarantee at least part payment, but it will make customers think twice before cancelling their order. Hope these tips help. Always remember, cash is king! Become a Bas Agent
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