When it comes to measuring any business venture’s success – be it for a start-up or fortune 200 corporations – it’s easy to refer to your profits as the key indicator of your position in the industry. While it’s a crucial financial metric, there is a particular component that can reveal more profound insights into your financial stability and performance: cash flow.
The cash flow determines every aspect of your operations, and without a proper stream, you won’t have enough to reach your desired profit. Seeing as it describes the money that enters and exits your business, finding ways to drive more cash flow to your venture should skyrocket your profitability in more ways than one.
How to Improve Cash Flow
With that in mind, the tips below should give a basic rundown on how to share your short-term cash flow a boost. Let’s start discussing how to improve cash flow:
Tip #1: Opt to Lease Instead of Invest for Start-Ups
When you’re still getting your foot in the door, leasing business supplies, equipment, and real estate may seem like a counterintuitive choice. Buying is the best way to support your long-term plans, but it can cause a significant bottleneck in your daily cash flow.
Leasing allows you to keep more cash to fund your everyday needs, allowing you to build your reputation and revenue without burning holes in your pocket all in one sitting. By paying small increments, you have more money and time to grow your business until it can afford to make bigger investments.
Tip #2: Always Send Out Invoices Immediately and Follow-Up
Invoices serve as the heart that ensures your business is alive and your sales thriving, so it helps send invoices to customers as soon as possible to minimize the downtime. While this encourages cash to come in faster, it’s not a guarantee since consumers will always take their time to complete their end of the bargain.
With that in mind, make sure to follow up when their invoices are due by sending e-mails or giving them a call. Adopting cloud-based accounting programs can save you the trouble as it can automatically notify clients with overdue invoices.
Tip #3: Charge a Late Payment Penalty
Even having a sophisticated accounting system won’t iron out late payments, so setting up a late payment penalty is a robust way to keep the problem to a minimum. Invoices are the lifeblood of your cash flow, so it makes sense to nip the issue at its bud by solidifying your invoicing policy.
The Bottom Line: Adopting Tried-and-True Ways to Boost Your Cash Flow
Cash flow is the heart of your company’s finances, and even larger-than-life organizations that are established in the industry can wrestle with cash crunch situations. It can impact the company’s operations, finances, and investing activities, so improving your cash flow management sets the foundation for your financial health.
How Can We Help?
Improving your cash flow can be tricky, but leaving the tasks to the hands of professional accountants can help generate more stream to your bottom line.
With the help of our industry-seasoned and client-centric cheap accountants in London, you can improve your books and keep your finances steady. Get in touch with us today and see what we can do to help bolster your growth!