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Business 101: How to improve your cash flow

Spike

We all want more cash-money right? We’ve got the tips for making sure that you’re getting out more moolah than you’re putting in. This one’s more for the big bosses out there but it’ll also be handy for those tradies that work for themselves.

FYI, cash flow isn’t just the money you’re making, cash flow is basically all of the money going in and out of the business – improving it just means making what’s coming in better than what’s going out. So how do you do it?

Budget it all out

If you run a business, you’re probably all over this but it’s important to get your numbers right. By budgeting for the entire year as well as you can, you’ll get a general idea of how much money will be coming and going. You’ll know when it’s a busy season and you might need more supplies, and when it’s slower-going. Obviously you can’t plan for everything, and we all know the unexpected crops up all the time, but budgeting for the regular costs like wages, vehicle expenses and marketing will give you a good start.

Get your payment terms clear

This one’s key to actually making you money. You’re probably familiar with a few people who have taken a bit more of a lax approach to payment, but if you’re very clear and you consistently follow up and stick to what you’ve said, over time this won’t happen nearly as often. On every invoice, make it clear when the expected payment date is and include a note about what happens next if they don’t pay it on time. You might be happy to give your mates a bit of leniency, but be careful about doing this too often because it will hurt you more in the long run.

Make paying easy as

The quicker and easier your clients can pay, the faster you can get paid. Although you might run all your payments based on an invoicing system, it might be a good idea to look at getting something like a portable EFTPOS machine for those smaller jobs so you know the money is there right away. That way the client doesn’t need to worry about it later and you don’t have to be wasting valuable time chasing up all the little unpaid bits and pieces.

Don’t be afraid to haggle

It’s not just with clients that you can get your cash flow sorted – you might be able to save some money with your suppliers. Do you have a regular guy that you purchase from all the time? See if he can give you a discount for your loyalty. Got extra material left over from the job? Ask the supplier if you can return what you didn’t end up using. Again, even if your supplier is a mate from way back, if he’s charging ridiculous prices and won’t budge, don’t be afraid to take your business elsewhere. Harsh, but you gotta do you, right?

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