cashflow

4 Tips For Managing Your Cashflow

 

If you’ve been following my work for a while, you’ll know that the reason I struggled {and lost my hair} in my first business was because I didn’t have a grip on my cashflow.

To be honest I didn’t know that there was a difference between my cashflow and my profit & loss and I was hiding from the money-side of my business in a BIG way.

I learnt the hard way that you can’t just casually ignore the money in your business and pray it will all work out. Because unless you take care of your money, your money won’t take care of you.I know this is something a lot of entrepreneurs struggle with so today I thought I’d share with you my:

Top 4 tips for managing your cashflow

 

1) Pay on time

Paying on time may sound counterintuitive as you try and eek a few extra days out of your cashflow but in reality this isn’t the case. Paying on time isn’t just important for your professional integrity {it will make it much harder to work with your suppliers and get a good deal/flexibility when you need it if you are known for not paying promptly}, but not paying suppliers on time can also lead to some pretty hefty fines. If you don’t pay invoices by the invoice date terms, your supplier could add a 4% interest rate to your invoice for every day you are overdue – not to mention the damage it can do to your credit rating hindering your cashflow problems in the long-term.

That being said, you should always pay on the exact date your invoice is due – not a day before or a day later. Therefore, if your supplier gives you 30 days to pay – take them and pay on day 30. Just make sure you don’t forget and have this in your financial plan.

2) Set clear terms and stick to them 

On the flip-side if you are invoicing and charging for your time and resources – make sure you have clear invoice terms, you invoice on time and you stick to the terms. I’m constantly surprised by the number of entrepreneurs I meet who have financial and cashflow problems and then when we drill down into why, it’s because lots of people owe them money and they either haven’t sent the invoice or chased the payment.

3) Make a plan 

My third tip is to always make sure you have a plan! This isn’t about restricting yourself with a budget, it’s about being realistic and sensible. Forewarned is forearmed – by having a clear plan and understanding of when money is coming in and going out, you’ll be in a much better place to plug the gaps and take action towards increasing sales when you know you are going to need more money and also create a smart annual financial plan. This is particularly relevant for those of you with seasonal peaks and troughs, by setting aside some savings in the busy times, you can plan your cashflow for the times you know sales won’t be as buoyant.

4) Keep track

Finally, you should never, ever be blind. The biggest mistake you can make with your money is to not know what is happening {often because you are afraid of the reality – I’ve been there!}. The easiest place to start with this is to simply check your bank accounts every day. Check the pending payments of what is coming in and what is going out and make decisions based on your financial reality – not what you hope is happening! I wrote more about how I manage my finances in this post on productivity tools I couldn’t live without.

 

If you really want to get to grips with your financials I recently published my first e-book…

MASTER YOUR MONEY

In this e-book we work through a number of exercises that I used in my business to help me go from serious debt to CEO of a thriving business and investment portfolio.

If you find yourself hiding from spreadsheets or anything money-related or you just want to know how you can implement some simple strategies into your business to make more of it then this e-book is for you!

Find Out More

I am so passionate about this topic and helping entrepreneurs gain financial control that every week, I host a weekly live workshop on Facebook where I share more tips and strategies for managing your money.

You can join the FB live here

I can’t wait to get to know you better and see you there!

 

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