One of the most common yet avoidable areas of stress for SME owners is the ability to manage and maintain sufficient cash flow.
Here are some cashflow management techniques from SME growth expert and accountant Tanya Titman to help free up your valuable time, so you can focus on the next stage of your business growth:
- Review debtor days:
As business owners know all too well – payment terms are vital. Feedback from the SMEs we work with indicate the wait can be as long as 50-55 days. That’s why the onus is on you, as the business owner, to review your debtor days – which is the average number of days your business is waiting to receive payment from customers for invoices issued to them – every month.
- Remind late payers:
The frequency will depend on your payment terms. For example, if your terms are 14 days – send statements twice a month. If you invoiced a customer on the 1st of the month, that invoice falls due on the 15th of the month. Don’t wait until the 30th to remind customers they owe you money.
- Innovate payment technology:
In addition to the support you get from Tyro, consider investing in accounting software to save paperwork and make payment as easy as possible. One option is Xero Accounting Software, which sends invoices with a Pay Now button making it simple to pay the bill.
- Plan, plan, plan!
With your business success, comes an understanding of the up and downside of growth. If you want to expand your business, factor that into your financial metrics as expanding your business requires more cash than most SMEs realise.
- Old debts can be a headache!
The balance for SMEs is to ensure they receive payments, but to have a due date for due receivables. In certain cases, it’s more beneficial to your bottom line to write old debts off as they’re skewing your data, consuming resources to chase up and – unfortunately – are unlikely to be paid.
- Ensure you have sufficient cash flow
Having sufficient cashflow is key to ensuring your business is sustainable and can grow. If you find yourself in a position where you need to borrow funds to tie you over, Tyro’s business loan could be the answer. With one flat fee and funds within 60 seconds, Tyro business loan is not a conventional loan. You have the freedom and flexibility to customise your loan and repayments are made from a percentage of your daily eftpos.
If you’d like to find more about Tyro’s business solutions, jump online or give us a call on 1300 966 639 24/7.
If you would like to find out more about Tanya Titman’s SME growth coaching, please visit her website at: www.tanyatitman.com