Five tips to improve company cash flow
It’s no secret to the team here at Albert O’Connor & Co Accountants that cash is the lifeblood of any business. Once the cash flow into your company dries up, problems can quickly begin to multiply. Keep the cash running freely and you can continue to grow your business.
Here are five tips for improving your cash flow from the Albert O’Connor & Co Accountants team:
Have a system to manage your debtors – Come up with a clear, step-by-step way to handle outstanding accounts. It might include:
- automated reminders on unpaid emails and overdue bills.
- a phone call or email when the amount has been outstanding for a certain period of time.
- a stop credit note on the client when they exceed an acceptable payment time.
Be prepared for tax time – One of the fastest ways to run out of cash is to find yourself short at tax time. Having a calendar that sets your business up for reminders every tax year is vital. You can also use tax pooling or other options to smooth out your cash flow.
Try not to dip into business funds for personal spending – It’s always tempting to tap your business account for personal spending. Instead, try to keep them separate. If you’ve over saved at the end of the tax year, you can draw down a nice bonus – that’s much better than being caught short.
Sell old stock – Too much stock? Consider old stock, old furniture, machinery or even stationery: they can all be sold to free up space and provide a small cash injection.
Forecast your cash flow – Create a cash flow forecast and that will help you monitor and measure the flow of cash in and out of the business.
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