Cashflow is the lifeline of any business. It is the movement of money into and out of a business, individual, or other entity, and it refers to the inflow of cash from the sale of goods or services and the outflow of cash to pay for expenses and investments. It essentially indicates how well your business is doing and allows you to plan for the future.

Businesses have their ups and downs and when you’re in the middle of a crisis, what can you do to mitigate the situation? Here are some helpful tips from your financial experts at JMA Credit Control.

Tip #1 Learn to manage cash flow

Managing cash flow is an important aspect of running a business, as it helps ensure that you have enough money coming in to cover your expenses. Are you faithfully following these tips for a better cash flow?

Create a budget: A budget helps you plan for your income and expenses and can help you identify areas where you can cut costs or increase revenue.

Monitor your expenses: Keep track of your expenses and compare them to your budget. This can help you identify areas where you may be overspending and take steps to reduce those expenses.

Maintain a positive cash balance: Make sure you have enough cash on hand to cover your expenses. This may involve maintaining a cash reserve or finding ways to increase your revenue.

Control your inventory: Managing your inventory effectively can help reduce costs and improve cash flow. This may involve implementing a just-in-time inventory system or reducing your inventory levels.

Monitor your accounts receivable: Make sure you are regularly following up on outstanding invoices and collecting payment from customers in a timely manner.

Negotiate terms with suppliers: Negotiating more favorable payment terms with your suppliers can help improve your cash flow.

Consider financing options: If you are having difficulty managing your cash flow, you may want to consider financing options such as a business loan or line of credit.

Tip #2 Don’t get loans – or at least avoid it

Loans can take a huge chunk of your cashflow and when something goes awry, the last thing you want is for your cash flow be affected.

Take a step back and look at your options. Are you in urgent need of financing? Take a look at your inventory – perhaps you can reduce costs somewhere. Remember that loans are financial burdens you must carry with you for several years – and you might not be ready to face this responsibility yet.

Tip #3 Stick to your budget

Have a sit-down with your financial team and take a closer look at your books. You’ve already set a monthly budget – are you able to stick to it? You should be able to tell after just 1-2 months if the budget you set for your business is enough to cover expenses and such.

With the help of a professional, pinpoint areas where you can save money or rotate your expenses. For example, if you have allotted $500 on advertising per month and you see that foot and organic traffic to your physical store and website has plateaued, you might want to cut the budget in half for the meantime until you can think of an effective marketing plan to help boost sales.

Tip #4 Pay off debt as soon as possible

If you have multiple debts and are having difficulty paying them all, it can be helpful to prioritise your debt payments.

• Make a list of all your debts: Start by making a list of all your debts, including the creditor, the balance, and the interest rate.

• Determine the minimum payment for each debt: Find out what the minimum payment is for each debt. This is the amount you need to pay each month to avoid late fees and to keep the account in good standing.

• Pay the minimum on all debts: Make sure you pay the minimum payment on all your debts each month. This will help you avoid late fees and damage to your credit score.

• Pay extra on your high-interest debt: After you have made the minimum payment on all your debts, consider paying extra on your high-interest debt. High-interest debt, such as credit card debt, can be particularly costly because it accrues interest quickly. Paying extra on this type of debt can help you save money in the long run.

• Negotiate with creditors: If you are having difficulty making your debt payments, consider contacting your creditors to see if they can offer you a payment plan or lower interest rate.

By prioritizing your debt payments and taking steps to reduce your debt, you can get a handle on your finances and improve your financial stability.

Tip #5 Business travel – what’s that?

Gone are the days when entrepreneurs would fly out to different locations around the world to meet potential clients or suppliers. Business travel is expensive and you don’t really need to leave your office anymore.

Thanks to the worldwide web, you can attract new customers and search for suppliers with just a click of a button. Make the most of the internet and the easier ways to communicate rather than overspending on unnecessary travel.

Tip #6 Hire a professional debt collector

If you are having problems with delinquent customers and outstanding payments from clients, don’t waste your time debt collecting – let a professional handle it for you! With the help of a debt collector, you can focus on other aspects of your business. You can also be 100% confident that any account payables will be paid in due time, increasing your cash flow in the process! The services of a debt collector are likely to be a lot more affordable than you realise and you don’t need to waste time that could be spent focusing on your business.

Contact JMA Credit Control today and ask us how we can help you. With over 40 years of collective experience under our belt, we know debt collection like the back of your hand. Our services are risk-free too – we don’t ask for any payment until debt is paid. We help small to medium sized businesses all over Australia, with offices in Melbourne, Brisbane and Sydney.  Give us a ring right now!