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3 Tips to Improve your Business’ Cashflow

 

Cashflow in small business is more often than not a pain point in reaching financial freedom. It can be hard to keep on top of a successful management plan when cashflow continuously falls short. Keeping the following three things in mind can help you avoid the void:

Tip 1: Make sure you have strong contracts

It is unfortunate but true that most financiers will consider a debt of 90+ days ‘bad or doubtful’, turning them essentially into a waste of time. If a debtor refuses to pay or takes longer than expected you may find that your cashflow is sabotaged. A way to avoid this is by ensuring that you have strong contracts going into an arrangement so that should it be necessary, you have legal recourse and are able to take action.

 

Tip 2: Understand your margins

When running a business it can be hard to plan ahead when you are just trying to keep afloat. Bills, wages, rent – the list could go on! These are all overheads to factor in when looking at your margins. You need to know how much you are taking home after all of your business expenses have been dealt with in order to avoid

 

Tip 3: Consider factoring your unpaid invoices

If your business is growing rapidly and you’re concerned about meeting your overheads, you may want to explore factoring your unpaid invoices as a potential solution to cash-flow problems.

Factoring works this way: Once you issue an invoice, a factoring company pays you a considerable percentage of the account receivable, so you don’t have to wait to get paid by the customer. The factoring company takes on the responsibility of collecting the money from the customer.

Invoice factoring can help improve your cash flow and free up the working capital needed to run your business.

 

Reform Financial are experienced in dealing with companies facing cashflow stress. If your business is suffering, reach out today and see how we can help you alleviate the pain.