10 New Years resolutions for a successful business
Small firms in the UK should view the first few weeks of the New Year as a time to be extra prepared for cashflow shortages, warns IGF, one of the UK’s leading independent commercial finance companies.
Cashflow can suffer over the festive holidays because many directors and other staff responsible for approving supplier payments take holiday during the period. To counter the challenges that inevitably follow the holidays, small businesses need to take steps to get their New Year finances back in order and start 2015 on safe ground.
So, shake off the winter blues and spring clean your business finances with these top tips below:
1. Look to the future. Prepare realistic cashflow projections for next year, next quarter and even next week. An accurate cashflow projection can alert you to trouble well before it strikes
2. Re-new your relationship and open up a dialogue with your finance partners. Financial services providers also offer a wealth of free financial advice and expertise which is often unknown and untapped by SMEs.
3. Make sure all your invoices are correct before they are sent out to ensure your customers have no excuse for not paying
4. Make sure you have a strong process for chasing up your invoices, and check those that have been outstanding for a while and try to get them resolved – even if it means writing off bad debts
5. Review your processes – make sure you tell your potential customers upfront about your credit terms, before you provide your product or service
6. Know your customers. Some of your customers will pay on time every time – others will be perennial late payers
7. Don’t always associate higher sales with better cashflow. As receivables usually will not be collected until at least 30 days after sale, a substantial increase in sales can quickly deplete your cash reserves
8. Consider using an invoice finance provider. These are financial services businesses that can pay you today for invoices you may not otherwise be able to collect for weeks or months. These firms will also be able to offer free, tried and tested advice for managing finances
9. You may be able to raise cash by selling and leasing back assets such as machinery, equipment, computers, phone systems and even office furniture. However, you could lose your assets if you miss lease payments
10. If your cashflow has become stable and predictable, you can consider investing your excess cash. You can earn additional interest income, as well as have the necessary cash to dip into during tough times.
Ewen adds, “The hangover after Christmas is felt more keenly by many firms which come back after the break to find that there isn’t sufficient cashflow in the business to keep them going until those delayed payments and New Year’s new orders start coming through. But by taking the right steps to prepare your finances you can start the New Year as you mean to go on.”