Improve Your Cashflow With Xero
Posted 18 Apr '18
Posted 18 Apr '18
Xero recently released some small business insights highlighting the seasonal cashflow problems that small business in Australia can face.
In January 2018 only 49.4% of Australian Small Businesses were cashflow positive and there was an average of 38.8 days for invoices with 30-day terms to be paid.
These stats are important to explore as they allow us to identify that certain times of year may impact your business cashflow and thus enable us to put procedures in place to minimize the damage this can do to our business and cash position.
1. Payment reminder systems
In our experience, automated reminders that go out to your clients the day before their invoice is due, as well as automated overdue payment reminders are an effective way to get bills paid!
Most people receive so many emails on a daily basis. It can be easy to miss an invoice here or there, so with a reminder system in place you can ensure you bill is top of mind.
2. Clear Payment terms with your clients (COD, 7, 14, 30 Days?)
Not only should you communicate clear payment terms with your clients before engaging with them. You should have payment terms that really suit your business. Can you business afford to wait 2 weeks for an invoice to be paid or is 7 days more appropriate?
3. Deposits on products
Whether it is a service or goods that you’re selling, it could be worthwhile considering if an upfront commitment is suitable for your operations. This upfront commitment not only takes the pressure off cash, it also ensures that your customer is committing to the product/service that they want to buy from you.
4. Creating and implementing a cashflow forecast
In small business, cashflow is the thing that keeps the business running smoothly. A cashflow forecast is a necessary tool that allows you to identify potiential shortfalls in cash, ensure you have enough to pay suppliers and employees, and spot problems with customer payments.
We are beginning to book our tax planning sessions before the end of the financial year, so if you’d like to talk cashflow, budgeting or transitioning to Xero to help with your business automation then call us today 07 3124 0244
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