Has your once healthy cashflow taken a hit these last few months? In these tough economic times, small businesses are particularly vulnerable. While lockdowns and the pandemic may see sales slowing down, the overheads and salaries don’t stop coming, and cash can become more of a drip than a flow. So, if the forecast is predicting a drought – it’s time to take action for a healthy cashflow.
When the going gets tough, the tough get going.
Healthy cashflow is the most important thing to keep on a tight rein in lockdown and this pandemic. Strategic and proactive accounting is key to sticking out this storm or better yet, thriving. Whether it’s renegotiating with your suppliers or cutting back on your expenses, here are some actionable steps to protect your cash flow.
Check your eligibility.
The Government has released several grants to support businesses throughout the pandemic, and with several new grants up for grabs, it’s important to stay up to date. If you need a hand, we will find the ones your business is eligible for and help you get your applications ready to go.
Harness your tool kit.
We’ve already touched on why budgeting is crucial, but it’s especially vital during tough times. Utilising tools like Xero and HubDoc allows you to forecast your ingoings and outgoings to ensure you know where to hold back and where there is room to budge.
Maximise your ingoings.
To beef up your ingoings, jump on to Xero and send off any of your invoices with all due haste. And while you’re at it, reach out to all of your existing clients or customers to offer a retainer or a deal that allows them to purchase your product or service in advance.
Knuckle down on late payments.
If you have any outstanding payments, this is the perfect time to chase them down. Once again, harness Xero to send out automated reminders for invoices and start the conversation with your clients. If you’re still having no luck, we have compiled a host of tips and tricks here – to help you get paid faster.
Start a conversation with your suppliers.
If you don’t ask, you don’t receive – so get talking to your suppliers about your current payment plan as there may be some room to wiggle. You can discuss options like aligning the bills with your invoice schedule or extending a line of credit for your payments. A supplier will most likely prefer to provide you with breathing room over losing your ongoing business relationship.
Take a fine-tooth comb through your costs.
It’s never a bad idea to review your expenses, but if your cashflow has seen better days, put it at the top of your list. Business costs can easily creep up, so place all your upcoming costs, regular payments, and subscriptions under a microscope. There may be an alternative approach for travel, functions or other purchases that aren’t crucial for your business.
Take stock of your inventory.
If you are a product-based business, pop into your storeroom or warehouse and take an in-depth look at your inventory. Perhaps you can avoid shipping costs by finding a local or cheaper supplier, or maybe it is time to investigate alternative products to reduce your expenses.
Give the bank a bell.
Before your cashflow becomes a dire situation, start the dialogue with your bank and/or the ATO to ensure you have everything in place before things go south. Alternatively, schedule a chat with your proactive accountant to weigh up your options.
Put your oxygen mask on first.
Last but most certainly not least, put on your oxygen mask first. If your head isn’t in the right place, then you won’t be able to make strategic business decisions aligned with your business’s long term success. Looking after your mental health and taking care of yourself is always priority number one. Beyond Blue has developed some great mental health resources and support for small business owners, check it out here.
When the going gets tough, the tough get ready.
As small business accountants, we understand the good, the bad and the ugly parts of operating a small business and the current hurdles we are all jumping. Whether it’s cutting through unnecessary expenses or finding grants you are eligible for, we are here to help proactively get your cashflow healthy again. If you want to start looking for ways to improve your money journey and business, book a chat or get in touch with our team today.