Cash flow is a pivotal aspect of your business. Your cash flow determines your decision making and it’s important you keep it as healthy as possible in order to have a successful business.

Follow these simple steps to ensure that your cash flow stays out of the red…

1. Regular monitoring

Keep track of all your transactions on a regular basis. Knowing what transactions are due to come out and what income is due to arrive in your accounts it’s really important. The best way to ensure all your transactions are reconciled is through cloud accounting. At LJM Bookkeeping we use Xero for all of our clients which integrates with most bank accounts with the bonus of automatic reconciliation. Using cloud accounting means you can check your cash flow from wherever you have an internet connection, helping you to make those important business decisions accurately.

  2. Review your outgoings

Do you have lots of little outgoings that you don’t actually need? These transactions may only be small but together they can make a massive difference to your cashflow. Review your spending, and if you have subscriptions going out each month that you don’t utilise enough, consider cancelling them. If you have regular monthly subscriptions which you can’t do without, think about changing to paying annually, many businesses offer a discount for doing this. Every penny is better in your pocket than theirs!

  3. Keep personal and business transactions separate

This can save you a lot of time with your bookkeeping. Having a separate bank account for your business transactions from your personal ones means that you can reconcile them so much quicker and there is no manoeuvre for confusion and error. Keeping your transactions separate ensures transparency of your business cash flow status.

  4. Get paid on time everytime

Introducing software such as gocardless as a payment method will ensure that your clients set up a direct debit so no payment is missed. Not only does this improve your cash flow but it also saves you time on chasing invoices. Try not to be too lenient to those clients who always pay late. Once you start this, they will take advantage and you can guarantee they will pay late every time. Be considerate of their situation and have a polite conversation with them to ensure late payment does not continue without a set agreement in place.

  5. Agree flexible payment terms with suppliers

Build great relationships with your suppliers and ensure you agree terms from the off set. Longer payment terms means you have the cash available in your bank longer, keeping a healthy cash flow.

At LJM Bookkeeping we use Futrli to produce cash flow forecasting and reporting for our clients to ensure that they are always aware of their financial status. This is important for the growth of your business.

If you would like to ensure accurate reporting, giving you continuity and efficient bookkeeping then please get in touch.