Cash Flow Tips For Business Owners

Struggling to manage your cashflow? Running behind in paying your bills. Always behind in paying your GST and income tax?

Guess What!! You are not the first and only one.

Here are some practical tips on managing your cashflow to stay ahead of your bills:

1. Keep Accurate Cash Flow Forecasts

• Prepare regular projections.
• Anticipate seasonal fluctuations, tax deadlines, and major expenses to meet deadlines.
• Update your forecast on a regular basis to reflect actual performance.

2. Speed Up Receivables

• Send invoices promptly.
• Offer discounts for early payments.
• Use automated reminders to follow up on overdue invoices.
• Consider online payment options for faster payments.

3. Manage Payables Wisely

• Negotiate longer payment terms with suppliers if possible.
• Take advantage of discounts for early payment if it improves cash flow.
• Schedule payments strategically.

4. Control Expenses

• Separate “must-haves” vs “nice-to-haves.”
• Regularly review subscriptions, utilities, and overhead costs.
• Outsource or automate repetitive tasks where it’s cost-effective.

5. Build a Cash Reserve

• Aim to keep 2–3 months of operating expenses in reserve.
• This acts as a buffer during slow periods or unexpected shocks.

6. Monitor Inventory Closely

• Avoid tying up cash in excess stock. Order as per requirements. Check historical data for stock ordering.
• Implement just-in-time (JIT) systems if suitable.
• Track slow-moving items and discount them to free up cash.

7. Use Credit Strategically

• Maintain a line of credit for short-term needs.
• Use credit only for investments that generate returns (not for covering losses).
• Keep a good relationship with your bank for flexibility.

8. Plan for Taxes

• Set aside funds regularly for GST, PAYG, BAS, and income tax.
• Use a separate bank account for tax money so you don’t spend it.

9. Review Pricing & Profitability

• Ensure your prices cover all costs plus a profit margin.
• Regularly review underperforming products/services.
• Don’t hesitate to adjust prices if costs rise.

10. Seek Professional Advice

• Regularly consult with an accountant or tax advisor.
• Get guidance on cash flow strategies, tax planning, and financing options.