Get that cash flowing for better business finances.

Owning and managing a small business is rewarding, exciting, and can have both financial and lifestyle benefits. Without the endless resources to which larger organisations have access, however, it can also be daunting. Bills come in, employees must be paid, and income is not always as reliable as you may like. It’s stressful; that’s the nature of the beast. But there are ways to get past those bumps in the road. 

Healthy cashflow—by which we mean having enough incomings to cover your outgoings at all times—is vital for smooth and sustainable operation of your SME. If you’re struggling with this, we have a few tips which might just help to ensure you’ve always got what you need to pay your bills and your people.

1) Consider a subscription model 

Can your goods or services be provided via a monthly subscription? This might work if: 

• You’re supplying something used regularly and reliably like coffee, pet food, cosmetics, or supplements. 
• You’re offering services that could be averaged out and adapted into a monthly package, such as design, copywriting, consultation, and even some trades. 
• Your product or service is digital and it’s cost-effective to offer unlimited access for a set price—something like Spotify is a good example of this. 

Changing some or all of your sales to subscriptions is hugely helpful. It creates regular and reliable income, allowing you to better plan and budget for your expenses.  

2) Cut costs where possible 

This seems like an obvious solution, but busy business owners can struggle to find time and thinking power to dedicate to investigating cost-cutting measures. Reducing the cost of any supplies you use will go a long way towards smoothing out your cashflow. 

If you’re in a trade, manufacturing, or another field that requires a lot of parts, materials, and supplies, you might consider joining a buying group as a way to cut costs. There are quite a few of these in New Zealand and Australia, some specialising in particular industries. They bring businesses together to create bulk buying power and access cheaper prices. 

You may also be able to negotiate with your suppliers personally and find better deals. A good relationship is very helpful here, so take care to approach these professional connections with a polite and friendly attitude. Some may offer discounts in return for early payments. See what you can get, and if you aren’t convinced you are getting the best deal, shop around—but don’t burn bridges. 

It’s a good practice to review all costs at the end of a month and take stock of which expenses are critical to your business. Some things are nice to have—if you can afford them. Ask yourself what’s really providing value to your customers, and what isn’t.  

3) Remove any barriers to payment 

Your customers or clients are more likely to pay you faster if you minimise or get rid of any roadblocks. Make it easy for them to pay you! 

Offer an easy payment portal online. Give them options for internet banking, credit card, debit card, and any other payment methods. Look into the many buy-now-pay-later options if you feel it’s a possibility. If you’re selling anything in person from a storefront or market, always have eftpos available.  

Send out your invoices as soon as possible. You may even offer a small discount for early payment. And of course, if you have a customer who consistently pays on time or early, nurture that relationship! This kind of reliability is valuable. 

4) Use forecasts and projections 

Financial planning is important. With a better overview and idea of what your revenue and costs are, you can plan to cover what needs to be covered, know how much you need coming in to pay the bills, and make informed decisions to improve cashflow. Knowledge is power. 

This goes beyond just keeping accurate and clear books, although that is also crucial. It’s valuable to forecasting your costs and revenue, taking into account all the information available to you to make educated guesses about the future of your finances. Careful planning will contribute to keeping the cash flowing.  

It’s not difficult to do with the right tools. Your accounting software very likely has a function that will help you to make a cashflow forecast. There are also specialty reporting and forecasting apps for this very purpose including Fathom, Spotlight, and Futrli. 

5) Make use of invoice financing services 

With the right invoice financing service, you can free up cash earlier and create a safety net against unexpected—or expected—expenses.  

There are many different types of invoice financing available, and we have a blog post explaining the various options. Essentially, invoice financing means receiving an advance on funds invoiced, so you can access your own cash a little earlier and more reliably.  

For SMEs that would like to keep complete control over their client and customer relationships, avoid ongoing fees, and select how and when they access the financing service, FundTap is a top choice. 

Our selective invoice financing service has no lock-in, no contracts, and no admin or processing fees. Clients pay only for what they use and can pick and choose which invoices to finance. It’s a fantastic solution to get early access to your own money and improve your cashflow situation as and when needed.