How to improve cash flow in a small business? This is a question we are often asked by clients and contacts alike.
I continue to be surprised by the number of businesses out there who focus on top line sales growth above all else and forget the rule that Turnover is Vanity, Profit is Sanity, but cash is KING!
And it’s such an important area of focus for any business, that we thought we should write a short article with 5 top tips for improving cashflow. So I did a little research to see what other experts advise, and was quite shocked by what I found.
Almost all articles on how to improve cash flow in a small business say you should do three things:
• Reduce costs
• Shorten customer payment terms
• Pay suppliers late
So, while all of these tactics will certainly improve cashflow in the short term, what sort of long term impact are they likely to have on your business?
As a business we believe that your business reflects your behaviour, and how you are treated by others will reflect how you treat them. We believe in paying our suppliers punctually, and expecting punctual payment (to our standard terms) in return. And likewise, while keeping an eye on costs is important, there is usually only so much you can shave off before having a detrimental impact on your growth.
So, I thought I’d write our own ten top ‘How to improve cash flow in a small business’ tips from scratch…
The only problem was, that once I started thinking about this subject, I couldn’t stop.
I’m now at 43 tips to improve the cashflow in your business (and yes, I do include the three mentioned above, but with caveats), so it’s a little too much for one article!!
What I’ve decided to do therefore, is to break each tip out into its own little microblog and share these as a weekly post on our website and social media channels. Or, if you would like to receive these directly to your inbox, please drop me a line and let me know and I will make sure this happens for you.
I’ve split them out into five different areas as follows:
• Accounting and general business
• Credit Control
• Sales & Marketing
I’ve done this to try to give a little structure to the articles, and so hopefully it is easier for you to find something useful to you. Not every cash flow improvement strategy will work for every business of course. And there will be some which you are already doing really, really well. So I’m very interested in your stories – what’s working for you in terms of cash flow management? What have you implemented recently which has had the most dramatic result on your cash position? What have you STOPPED doing which has had an equally dramatic impact on your cash flow? 🙂
As always, we love to hear from you, and would be more than happy to discuss any concerns you have around cash flow in your business. You can contact us via social media, or directly via email, phone or our website.
Finally, I will leave you with a quote from entrepreneur, author and speaker, Keith Cunningham when I attended his “4 Day MBA” many, many years ago. He said something along the lines of “to all the gentlemen here, you need to start thinking of the cash in your business on the same lines as a beautiful woman – you may have her for now, but if you don’t pay her close attention and give her the focus she deserves, you’ll look round one day and she’ll be gone” … or words to that effect…