Good businesses are built on good habits. James Clear once said, “success is the product of daily habits—not once-in-a-lifetime transformations.” When it comes to business cash flow, this really rings true. Making small, easy changes to the way your run your business– and sticking to them– is what will help you reap the rewards in the future.
We never know what could be around the corner. With the pandemic and the rising costs of living, it's been an unpredictable few years. If anything, this highlights the importance of managing your cash more than ever. Making cash flow a priority and implementing strong cash flow habits will put your business in a better position to navigate change and come out the other side stronger.
Here are 4 cash flow habits to set your business up for success.
Regularly manage expenses
Keeping track of the costs in your business is essential for effective cash flow planning.
When it comes to business expenses, little and often is the way to go. Set aside the time to regularly do your expenses, whether it be weekly or monthly. This means you’ll always have accurate and up-to-date financials to feed into your cash flow forecasts.
It’s important to invest in good software, too. With apps like Dext, expenses management couldn’t be easier. It’s as simple as photographing your receipts and uploading them to Dext, then the app will publish them to your accounting software.
Remember to take the time to regularly track your outgoings and review any non-essential costs that could be reduced or cut down completely. This is a quick win that can help keep costs down and boost your monthly cash flow.
We always recommend keeping business and personal finances separate– this makes it much easier to manage business expenses.
Have a cash buffer in place
Almost all businesses will need to borrow cash at some point, whether it’s to fund the next stage of growth, cover costs, or navigate a bump in the road. It’s all part of the natural lifecycle of a business. The biggest mistake you can make is leaving it until it’s too late.
That’s why it’s always a good idea to have some extra cash set aside. You never know what could be around the corner, whether that’s another pandemic or a financial crisis.
Having cash reserves you can draw on– whether it’s taking advantage of business loans or setting aside cash to cover tax bills– gives you the peace of mind that you have something to bounce back with should you need it. And if you don’t need it? Well, then you’ll be in the fortunate position of having a cash surplus to fund your next stage of growth!
Review your pricing
With the rising cost of living, now might be a good time to assess your pricing model. Are you selling your products or services at the best price? Could you charge more for what you do? Find out how much customers are willing to pay and adjust your prices accordingly.
Regularly keeping an eye on your prices and tweaking them in response to the current financial climate is an easy way to boost cash flow month to month and ensure your business stays profitable, whatever comes your way.
Do regular cash flow forecasts
Cash flow forecasts are future projections of money in and out, allowing you to make accurate assumptions about the financial health of your business in the coming weeks or months.
With regular cash flow forecasting, you can get a holistic view of the health of your business, estimate the impact of future plans, and grow in line with your goals and ambitions.
If you’re new to the world of cash flow forecasting, we recommend investing in some good software like Float to help you get started.
Float is cash flow forecasting software offering precise, detailed and up-to-date cash flow forecasts. It pulls data from your accounting solution and visualises it in real-time, ensuring that your forecasts are always up-to-date, so you can make the right decisions for the future of your business.
Find out more about Float and how it can help you manage cash flow.
