To maintain a healthy cash flow, you need more than just strong revenue. Improve your small business cash flow by implementing five simple cash flow rules.
Need a hand managing cash flow? You’re not alone. The key 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:
1. Keep your books accurate and up to date – so you can see your financial state at a glance.
2. Don’t be too lenient with your customers – you can be direct and still polite. Keep a close watch on your accounts receivable turnover at all times and act sooner rather than later.
3. Keep your accounting simple – so you have a good handle on these business metrics.
4. 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.
5. Build a cash reserve – so you are prepared for unexpected events and can take advantage of opportunities when they pop up.
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.
Get in touch for guidance on your invoicing and business cash flow.
About Pathfinder Solutions
Pathfinder Solutions advisory team members have either owned or managed businesses, or are investors themselves, so we know first-hand the challenges you face in your world.
Sure we’re Accountants, but the best solutions in business come from focusing on more than just the numbers. Our real-world business experience delivers just that.