Well the good news is that the Reserve Bank has told us the recession period caused by the global pandemic is largely over and the Australian ecomomy is slowly growing, even with Victoria’s lockdown, which has now lifted. So the worst is past, but you still need to survive.
Cash flow is the life blood of your small business, so lets have a look at what you can do to maximise it.
Cash flow in – geting payment for your goods and services is now the highest priority for your business. If you are invoicing:
Follow up regularly with any customers that have outstanding invoices and may have a reputation for slow payment. Offer a payment plan if cash flow is tight in their business but in the end you can’t be treated as an interest free loan. Again its a balancing act between looking after your own interests and being reasonable with customers but you will know the ones who derserve some help and those that are stepping over the line.
Consider asking a friend or family member to make the calls to customers with outstanding balances for you. As women we can so strongly advocate for each other but find it hard to do the same for ourselves. I remember a well loved media figure telling the story of how in her early days she would call pretending to be her own agent to book appointments and interviews to avoid having to sell herself. Ask you BFF to be your Emily from Accounts to help you hunt down your outstanding invoices.
Review your payment terms, you may want to reduce the period for payment or ask for payment up front. It is important to look after your regular customers but not at the expense of yourself. Have a chat and see if you can negotiate suitable terms directly with them, communication is essential.
It is vital you invoice promptly, as the longer you take to invoice clients the longer it is til you recieve payment and as we noted ealier, cash flow is the life blood of your business, free it up as quickly as you can.
Consider a third party payment system that direct debits the customer when the job has been completed or item sent. If you have regular customers consider a weekly or monthly ongoing part payment that may help both your and their cashflows.
Free Marketing – Social media and other free form of marketing will help you communicate with your customers and let them know you are open for business. Keeping up your profile is key to a smooth transition into the rebuilding economy. Customer may not be buying now regardless it is important to be visible in your market, particularly at low/no cost. Email your data base or post and spread some positive energy, even if your is feeling a bit low.
Cash Flow out – are there any expenses that you haven’t already reduced that could use some tweeking ? Are there any suppliers that you can call to negotiate payment plans. As we touched on earlier, it is going to improve for everyone and we want as many people to survive with their businesses intact as possible, Contact with your suppliers to see if they can provide any help, just like with your customers, communication is the key.
It’s not much fun but essential that you review your cashflow weekly, put aside 30 minutes in your calender, pour a tea or wine and lets review your cashflow:
- Make sure whatever system you are using to capture data, a spreadsheet or software like Xero, is up to date.
- Calculate the payments recieved (cash flow in) and the expenses paid (cashflow out). The goal is for a positive cashflow in week.
- Have a look at the outstanding invoices and make a plan of how to tackle them for next week
- Have a look at expenses to be paid and make a plan for these too.
- Beathe and know you’ll be OK, this too will pass…
This is crucial time spent to help your business survive this period of rebuilding.
Thank you for your time reading this blog post. Please feel free to contact me if you have any questions or would like to connect.
Author – Bridgett Fuller, Director at Belle Accounting Co Pty Ltd