Money, Money, Money!

by Brian MacAuley on 6th February 2020

Ask any business across Mid Ulster right now to list what their top three worries are and I guarantee almost every one of them will have ‘cash flow’ in that list. Tax bills are due at the end of this month and will see most businesses paying out a lump sum. With the air of new year resolutions still hanging around, there will be a lot of people planning to set up new businesses or grow their existing businesses and for most their biggest concern will be cash flow – they’ll be asking questions like ‘how do I make sure there’s enough cash to pay wages at the end of the month?’ or ‘how do I ensure everyday bills can still be paid when I’m investing in growth?’

There are some things that a small business can do though to maximise cash flow and minimise the worry. These include getting money in, using cash wisely and having a back-up plan.

Getting the money in

No money in = no business, so make plans for getting money in as quickly as possible. Invoice as soon as the work is completed if you are a service-based business and set very clear payment terms in advance of doing the work. Don’t be afraid to ask if there will be any issues with getting paid on time. Asking this question early will mean that you can come up with solutions to get money in your bank account e.g. perhaps you take a deposit up front and the balance later. Make it easy for people to pay you – put bank details on your invoices so customers can pay by bank transfer, set up PayPal for business and if you’re in retail explore options for card readers.

Using & Spending your cash wisely

Use your cash to make you money. If you buy a lot of items online you could sign up for sites such as Top Cash Back where you get money back on purchases like insurance, office equipment, travel tickets etc. Also use an interest-bearing bank account so you earn money on the cash in the account.

Make payments as late as possible. Set up online banking for your business and set up direct debits or payments to come out on the last day that they are due – this increases the interest you can make on cash in your account.

Spread out your expenses. While it might be convenient to have all your payments coming out on the same day, it doesn’t do much for cashflow – just be sure to monitor it regularly so that you have enough cash in for each payment. Rather than paying costs like insurance or professional body memberships up front, seek payment options instead. This will allow you to maintain cashflow

Back-up plan

Always have a back-up plan. Try to have more cash than you actually need every month. There will always be emergencies. Build good credit for your business – a good way to do this is to make purchases with a business credit card. Having a good credit history will make it more likely for you to be able to take a loan if need be. By opening a business bank account early on and by communicating effectively with your bank you can build a solid relationship which will be useful if you ever need to apply for a loan or an overdraft.

If you’re planning to start or grow your business call Dungannon Enterprise Centre on 028 87 72 489 for impartial advice and signposting.

About Brian MacAuley
Brian has been at the helm of Dungannon Enterprise Centre for 30 years, keeping the wheels turning smoothly on a day to day basis.

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