It’s the time of year where we have just got over Christmas and holidays and many businesses are trying to not look at the bank account and the invoices are mounting. Many have that sinking feeling that there may be a cashflow problem but aren’t quite sure.
From my experience now is the time to take control of your finances and the small steps that you do now could reduce the stress levels and get your business back on track.
Here are some steps for cashflow success.
Step 1 – Where are you actually at?
Having accurate information on your business performance will help you understand if you are on track with your business plan. What you need to do is:
- Get your bookwork up to date – all bank accounts and credit cards reconciled
- Enter all your creditors – the invoices you received to be paid
Once you have this you will be able to ascertain where you are at Ie. how much more do you owe than you are going to receive.
Step 2 – Future Funds
Before you plan, make a note of what future debts you have. February is a cashflow nightmare month for many businesses as they have a double hit of tax with the December BAS and January IAS due within a few days of each other and less debtors to collect due to the holiday period.
Step 3 – Create a Plan
From here you need to prioritise who will be paid and when. Make sure you take into consideration the following:
ATO Payment Plans
If you are on a payment plan your ATO liabilities need to be paid on time otherwise the plan will be defaulted which can cause significant issues.
If you must delay paying a creditor what affect will that have on you purchasing future supplies/materials?
We have a weekly payment template that we find assists many clients. If you would like a copy to help you develop your plan, please feel free to contact us.
To ease the pain, you need to get funds into the business. To do this you should look at the following:
- Sales – what actions do you need to take to make additional sales. Do you have leads that you need to revisit or follow up?
- Debtors- start phoning. In business it is often the squeaky wheel that gets the funds.
- Assets- do you have plant and equipment that you are not using that you could sell to bring in some quick cash?
- Lending- speak with your bank. There may be an opportunity for a temporary overdraft or to refinance.
I put this in big letters as this is the biggest issue I see with Business owners and liabilities. You may be surprised but your suppliers do not want to see you in financial trouble. Many are happy to work with you through this time.
Secondly, a problem shared is a problem halved. Give us a call perhaps someone independent looking at the situation could have a solution.
Step 4 – Learn from the issue
Make a note now of what happened in November/ December last year to create this issue. That way you can learn from this and put in place plans so that next year you can enjoy your holiday and coming back to work!!! If you would like our template for weekly cashflow planning or to arrange a strategy session with us, please contact our office now.