It can be easy to think that cash flow management only applies to smaller businesses, yet it’s actually crucial to the sustainability of large companies too. Rather than focusing on how much money the business is making, cash flow is about the ratio between income and expenditure. In its simplest form, positive cash flow is when there’s more coming in than going out, which can be tricky to achieve on a long-term basis.
As businesses continue to adapt to the new normal brought about by Brexit and the coronavirus pandemic, cash flow management has become even more important than before. Staying on top of your finances requires a keen eye for detail and a thorough understanding of how the business works, with many opportunities being available for cutting down costs. Aaron Gilmore of TreyBridge Accountants recommends the following actions as a means of managing your cash flow more effectively.
Starting with smaller purchases, it’s amazing how much money can be taken up by office supplies. Whilst this applies to obvious examples such as stationery and consumables, it also extends to your energy usage, insurance, rent, subscriptions to business tools and much more. The first thing to do is take a look at all of your monthly outgoings and decide if anything can be reduced – there could very well be a regular expenditure that simply isn’t necessary, or items that can be bought from a more affordable supplier. It could also be worth investing in more efficient technology, which comes with an initial outlay but can greatly increase productivity and your profit margins along with it.
Your marketing activity is another focus area. An effective marketing strategy will get your brand, messages and service offering in front of a targeted audience, but it doesn’t stop there. By using blogs, social media, email newsletters and video content to full effect, you can generate leads and move them along the sales funnel until they transform into loyal customers. This can significantly increase the amount of business you invoice for each month, further fortifying your cash flow.
Many business owners also attend multiple networking groups every week, most of which come with a fee. If you enjoy taking part in lots of networking and it’s bringing results, there’s no reason to stop. If, on the other hand, you’re allocating valuable hours that cut into your workflow and personal life without bringing a profit, it’s worth deciding which groups deserve your presence and which can be ditched. Investing in a single membership group will bring more lucrative results than minimal activity in a few.
It’s also crucial to remember that your time is precious, so it needs to be spent wisely. There are a number of ways to achieve this, which range from simple changes to working practices, to the application of useful digital tools. The most powerful tweaks to the way you work are often the ones that are forgotten or neglected. For instance, minimising distractions throughout the day and especially when you’re carrying out important tasks will help you to remain focused and in control. The more efficiently you use your admin hours, the more time is freed up for service delivery and customer acquisition.
Aaron Gilmore is the owner of TreyBridge Accountants, which delivers bookkeeping, payroll, credit control and cash flow management services to businesses across the UK. You can contact him on 01482 235575 for tailored advice designed around sustainable business growth.