Cash flow can be unpredictable. Things out of your control, such as a rise in the cost of materials, change the way money moves through your business.

Making small adjustments can help you stay resilient to change.

Before you decide on adjustments, test them out by:

• visualising your cash flow with a cash flow canvas
• forecasting with financial reports such as a cash flow statement
• speaking to an adviser.

1. Consider your pricing

Pricing is a balancing act. To get it right, you need to understand your customers, how much it costs to deliver your products or services and the value of them.

• Work out how much margin you need from your sales to cover your expenses.
• Focus on your most profitable customers, products or services. If customers only want part of what you offer, focus on that.
• See if you can increase your prices without losing business. You can monitor the change in prices for some goods and services by checking the consumer price index (CPI).

2. Increase your sales

Sales growth is crucial to the survival and growth of your business. Get more sales by offering something new, expanding your market or improving the way you sell.

• Look for other problems you can solve for your customers.
• Reach new customers through a marketing campaign, sales promotion and social media.
• Make your sales process more efficient by selling online and offering new payment methods.
• Convert more enquiries into sales by improving how you communicate with customers.
• See if you can offer markdowns on full-price products or services.

3. Collect cash owed to you faster

Collecting payments from customers faster frees up your cash. Managing your invoicing and debtors helps you get paid sooner and prevent bad debts.

• Use a digital system to automate your invoicing and send invoices earlier.
• Update your payment terms. Encourage customers to pay sooner or upfront by offering early payment discounts, having late payment fees and needing deposits for special orders.
• Chase up outstanding payments when you haven’t been paid. If you don’t have the time, consider using a reputable debt collection agency.

4. Review your expenses 

Reviewing your expenses regularly helps you save money, especially as costs rise. There are some costs you can’t avoid, but small changes can make a big difference.

• Cut out any expenses you can do without.
• Arrange a payment plan for larger expenses.
• Shop around for cheaper options for consumables like energy. If it saves you money, switch banks, suppliers or insurance companies.
• See if you can combine your current debts into a low-interest, low-fee product or get a better deal elsewhere.

5. Employ the right people

Employing the right people at the right time supports you and sets you up to grow. Before you bring someone on, make sure you check the total cost of employing them including their pay, leave and entitlements.

• Stay flexible with employment options. Match your roster to peak periods. Consider outsourcing tasks, especially if you only need specialist skills for a short time.
• Reward people for improving your cash flow, such as reaching sales targets. If you pay them a commission, wait until the customer pays first.
• Save on hiring costs by retaining people through development and training and work/life balance.

6. Manage your inventory

The more unsold stock you have, the less money you have. Forecasting your customers’ needs and buying stock at the right price, as close to the time of sale as possible, frees up cash and shelf space.

• Reduce costs by making sure your stock levels are not too high.
• Use an inventory management system to automate your purchase ordering and reduce the time between placing and receiving your orders.
• Clear stock that isn’t selling, is out of date or is no longer useful.
• Negotiate better terms with suppliers. If you go with a cheaper supplier, make sure you’re not compromising on quality.
• See if you can buy stock only once a customer places an order.

7. Make your assets work for you

Assets are often expensive, such as vehicles, equipment and property. If you’re not using your assets, you could put the money to better use.

• Consider leasing or hiring an asset to spread out the cost, especially if you only need it for a short time.
• Refinance your assets if you can get better terms from a lender.
• Sell what you no longer need to free up cash.

8. Get advice from a professional

If you haven’t already, talk to an accountant or business adviser. They can help you understand your cash flow better and find improvements to suit your business.

If you have any questions, feel free to ask them in the comment section. We will be happy to answer all your queries.