Five tips to improve your businesses cashflow
1. Invoice your customers promptly
The invoice is in effect the first request for payment and should be sent out immediately the goods are supplied or the work is done. Remember too that the sooner the customer receives the invoice, the sooner it gets into his or her payment process.
The invoice should be accurate and clear and should contain all the information required for the customer to pass it for payment, including the customer's purchase order number. The invoice should also say precisely when and where you expect to be paid.
2. Send out monthly statements
Monthly statements listing your customer's payments and all unpaid invoices are important. Some customers may not keep accurate records, even losing or forgetting to record your invoices. Sending them statements will also alert your customers that you are aware of outstanding invoices and you expect prompt payment. If you don't, you are inviting exploitation by unscrupulous customers. Statements are worth the time and postage.
3. Check the bank statements
Keep up to date with payments that have been made to you and invoices that have been settled, noting that payment has been made for the correct amount and noting if any outstanding balance is owed. Some businesses have set times of the month to settle payments so if you miss a customer’s cheque run you might have to wait another month and that directly affects your cash flow.
4. Review monthly reports
This report lets you analyze your cash flow based on all revenues and expenses, for example, cheques, credit cards, recurring account transactions, customer liabilities, and so on. The report provides information about the liquidity of your business.
5. Prepare a simple budget
Creating a budget for your business will provide a guideline for expected income and expenses and enable you to compare your anticipated financial goals with the actual numbers
If you are looking for a bookkeeper based around Solihull, please contact Damien at Cloud Bookkeeping
