How to crush the cash flow crunch and set your business up for growth in 2021
Even the most profitable businesses can be undone by poor cash flow, no more so than in 2020. Without the right inflows of cash at the right time to pay your staff and suppliers, keeping your business afloat can get very tricky indeed.
If this is something your business is struggling with, you’re not alone. Even before this crisis, research commissioned by Intuit found that 69 per cent of businesses worldwide were stressed out by cash flow issues.
Here are some tips to ensure that a cash flow crunch doesn’t catch your business out:
To stay on top of outgoings
1. Defer costs where appropriate
Look into what government tax relief options exist for your business. During COVID-19 the government has made a number of deferral programs available with the goal of freeing up cash for businesses who are struggling. Check at both the federal and state level to see what might apply to your business, or work with your accountant to get tips on what you might be eligible for.
When it comes to your outgoings, don’t be afraid to ask for help. If you’re finding it hard to make payments on time, consider asking vendor partners, lenders or government agencies if deferring payments or restructuring terms and rates is an option.
2. Take a second look at your discretionary expenses
Go through your discretionary expenses – such as marketing budgets, subscriptions and memberships – with a fine tooth comb to see what can be cut. Often we can spend thousands without even realising it, simply by not paying attention to where money is leaking out of our business.
3. Visibility, visibility, visibility
Take advantage of the latest tech tools that can help you stay on top of your expenses with less legwork. Online accounting applications can help you get there by allowing you to quickly scan receipts and other source documents and attach them to specific transactions, or use them to create new transactions.
You can also email receipts to your books in seconds. Simply snap or email your receipts and the software extracts the information, matches it to a transaction and categorises it for you.
In some instances, turning on class and location tracking will allow you to automate tracking, analysing and reporting of your business expenses.
To increase cash coming in:
1. Make sure you’re on top of who owes what
You’ll want to figure out which customers owe you the most money so you can open up the lines of communication to get those invoices paid. Invoice reports can help you to quickly identify which of your clients’ customers owe the most money so you can direct your attention where it’s needed most.
2. Get help from automation to accelerate your invoicing
Getting invoices out to clients fast should be a key part of your strategy. Use software to generate invoices fast and accurately and then automatically email them to clients as soon as you’ve delivered your product or service. Don't forget to provide an online payment option.
Cash flow is a major threat to business continuity in 2020. Thankfully, there are numerous tools and support mechanisms that can make managing it far easier. By taking some of the legwork out of staying on top of ingoings and outgoings, you can free up your time to focus on building your business into 2021 and beyond.
Mindy Eiermann is director of product management at Intuit.