13 Tricks to Treat Your Business Cash Flow
The past few years have been a haunted house of surprises for small business owners. While improving profits is always on the agenda, it's often the lack of cash that sends businesses to the dark side. Managing your cash flow can be a real fright for even the bravest business owners.
Great cash flow depends on two things: collecting the treats from customers as swiftly as a ghostly apparition and keeping costs down whilst while paying them as late as a midnight graveyard stroll.
Here are our top ingredients to conjure up a magical cash flow potion:
1 - Claim all enchantments back:
Never underestimate the hidden charms in unclaimed VAT. Make sure to offer your receipts to your wizard bookkeeping team. They have strict rules about what they need to reclaim VAT. Ensure they are presented to them to unlock the maximum deduction from the mystical HMRC.
2 - Payment Charms Up Front:
If you practice the art of services, can you summon a portion of the payment before casting your spells? If a client truly wants your service, they should willingly offer a portion before your work begins. Make this the norm for all clients and watch your cash flow soar.
3 - Trick or Treat with Options:
In the realm of business magic, there are many providers offering payment options. Can you add links for credit cards on your site (XERO users, it's a breeze)? Can you offer a link for payment through the magic of PayPal? Perhaps you could explore merging with a provider that spreads payments over several moons, like Klarna? The more options you provide, the more likely they are to conjure quick payment.
4 - To Penny-Pinch or Not to Penny-Pinch:
Examine your expenses and banish any that are unnecessary. Ensure you're not toiling to earn treasures that vanish into thin air. However, remember that sometimes scrimping on expenses has a higher cost. Consider the value of your time and how it can bring greater rewards.
5 - Seasonal Enchantments:
If your business experiences seasonal peaks and valleys, consider shapeshifting. Many petting farms transform into mystical Santa's Grottos in winter, while summer ice cream vans become hot coffee vendors. Seek a niche in the market that your business can fill during a time when your primary trade is quiet. This dual magic will keep the gold flowing during the usual lulls and maintain a steady stream of funds throughout the year.
6 - Extend the Spells:
Communicate with your creditors about extending the time before you must offer your payment sacrifices. Perhaps a supplier might grant you extra time before demanding their payment? The mystical HMRC may be open to extending the time to pay. Approach them about any debts (ideally before the due date) and request they be spread across several moons.
7 - Finance Your Potions:
If you must make a significant purchase, consider financing it through the retailer's own enchantment or an independent provider. You'll pay an interest fee, but you won't drain your reserves all at once. Just ensure the magical financing period is shorter than the useful life of the asset!
8 - Reducing Charmed Inventory:
Hoarding vast treasures ties up your magic reserves. Consider switching to alternative suppliers who deliver their goods more swiftly, so you don't need to hoard as many. Sell your old stock at a discount to clear the vault and conjure much-needed gold.
9 - Monthly Enchantments:
The sorcery industry is a shining example of monthly subscription billing. When Butlers began its journey in 2011, monthly billing was rare for accountants, who preferred to invoice upon completing their work. Monthly billing is now the standard arrangement. How can you weave this magic into your business? Could you weave your services into a monthly payment rather than upon completion? Regular, recurring invoices (ideally paid through direct debit) will boost your cash flow like a potion.
10 - Trickster Invoicing:
We've all been there. You hesitate to send the invoice immediately because your client's cauldron of gold is running low, or it's near All Hallows' Eve, and you don't want to haunt them with a hefty bill. Although you care about your clients, you must care about your own well-being more.
11 - Embrace the Magic:
Summon your powers and craft a cash flow forecast for the next 6 or more moons. Be truthful about your current situation, then pick some of the suggestions below that will work for your business. Prioritise the ones that work their magic the fastest.
12 - Seek Magical Artifacts:
Seeking magical artifacts seems to be the golden chant among businesses with the desire to grow. If your business is a fledgling, you might be eligible for the SEIS (Seed Enterprise Investment Scheme). This scheme grants tax benefits to those who invest in your business. It's been a spellbinding success for some of our clients, a marvellous way to bolster your cash flow in the early stages.
13 - Moonlit VAT Rituals:
If you regularly summon VAT refunds, consider switching to monthly VAT returns instead of quarterly ones. It may require a bit more effort each month, but with meticulous bookkeeping, it's as easy as brewing a potion. Watch your VAT refunds flow in 12 times a year.
14 - Bewitching Due Dates:
Ensure your clients grasp the due dates of your invoices. Don't hide them in the small print at the bottom of the scroll; communicate with them from the very first incantation. Make sure they understand the due dates and the curses that may befall them if they tarry. Perhaps you charge a late payment fee or interest. Ensure they understand within their terms and conditions with you.
We hope these enchanting ideas have been spellbinding. Butlers can assist with magical cash flow forecasting and other mystical needs. You can book a free divination meeting with us here:
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