Building a healthy cashflow is vital to successfully plan the future of your business.

There is an old saying “Turnover is Vanity, Profit is Sanity”, which is true – however Cashflow is king.

At the end of the day, it doesn’t matter what your turnover or profit are on paper, if you haven’t received the actual cash payment your, business will be in serious trouble.

Physical cash in the bank is needed to buy your supplies, pay the bills, and yourself. Without it you are not going to go very far!

Cashflow is exactly that – the flow of your cash – in and out of your business. It may seem an obvious statement, but you need to ensure you have more cash coming in, than going out each month if you want your business to survive and flourish. You will need to assess your cashflow each month to keep on top of it and ensure you have enough cash to pay for everything.

There are 3 key steps to ensure your business keeps a positive cashflow and flourishes.

Building Foundations

This is more than just getting your tax return or accounts done; it’s the building blocks for your business finances. Using Xero and add-on partners to improve efficiency through automation, plays a critical role in the next two steps. Get this bit right and the next two steps will be much easier. Your financial foundations include expense management, sales system, getting paid, credit control and banking.

Financial Healthcheck

Forecasting, including cashflow forecasting (which shows projections of money in and money out), are crucial for you to understand how your business works. This allows you to take this one step further to improve your financial health and the ability to reach your goals.

Cashflow Solutions

Once you know your forecast and what potentially will happen in the future, you can build an action plan to solve any potential issues. We work with some great companies who can help your business access additional funds when you need them, to either improve short term cashflow management or achieve longer term business goals.

Why not download a copy of our free Cashflow Calm guide.

Our free Cashflow Calm guide takes you through each of these key steps in detail. Xero plays a central role for your business finances.

Within this guide, we will introduce some of the app partners in the PPF App Stack that we use in-house ourselves, as well as recommend to our clients.

The core app we recommend using with Xero is Receipt Bank, and the rest of the apps included can be bolted on to suit the needs of your business.

Cashflow Quick Wins

Upsell at every opportunity – additional services/products (think McDonalds – ‘Do you want to make that a large meal?’ – or when ordering a coffee they ask ‘would you like a cake with your coffee?’)
Agree terms in advance
Request deposits upfront before starting work
For long term projects – request deposits and stage payments, do not invoice all in one lump sum at end
Don’t assume people are going to pay! Remind them (Chaser has a handy reminder before due date email)
Make it clear when you want people to pay you and how
On completion of your job/work you could arrange a curtesy follow up call to ensure they’re happy, they’ve received the invoice and the payment has been authorized as required.
Ask your suppliers for more time to pay a bill, or set up a payment plan.

For more tailored advice relating to your business ideas Get in touch with Pink Pig Financials, to make the best start in business.