“Cash flow has the power to keep you up at night or the confidence to rest easy. Here are some ways to recognise and stamp out risks while also creating efficiencies where you can.” - Sam Thomson, Relationship Manager, ANZ Business & Agri

Cash flow, the money entering through sales and exiting as wages, bills, and expenses, is your business's lifeblood.

A healthy cash flow helps build working capital and invest in growth. However, cash flow issues can threaten your business's health.

Identifying cash flow problems
Certain patterns might indicate cash flow issues. Have you ever unexpectedly gone into overdraft or struggled to meet overheads and wages during slow periods? These problems may suggest your cash flow management needs attention.

Strategies to manage your cash flow
The first step to controlling your cash flow is to prepare a cash flow forecast. This tool lets you project your business's incomings and outgoings, helping identify potential shortages. If you spot a shortfall, don't panic—quick actions like extending an overdraft or initiating a sale can resolve it before it becomes a problem.

Making the most of a surplus
A surplus in cash flow might be tempting to spend right away. However, consider setting aside some as reserves. These savings can help during slower business periods to cover costs. Alternatively, investing in new equipment or marketing could spur growth.

Shortening your cash cycle
A key to maintaining cash flow is getting paid faster. Consider technology solutions that let you get paid instantly, reducing the need to chase invoices. If invoicing is required, don't wait until month-end. Consider encouraging early payments with discounts for quick settlements.

Reviewing and adjusting pricing
Raising prices can be daunting, but may help boost cash flow. Your market might not be as price-sensitive as you think, and competing on quality can be more sustainable.

Effectively managing creditors
Don't avoid creditors if you're struggling to pay bills. Discuss solutions and work with them to find a beneficial arrangement.

Using tech to lower overheads
Consider using technology to cut costs. Hold meetings online, move your business online, or use cloud storage to help reduce IT expenses.

Managing your debtors
Offering credit can be beneficial, but carries risks. Conduct credit checks on new customers, set limits, and outline your terms. Maintaining healthy cash flow is crucial for your small business's success. Efficient management helps to ensure steady money flow, fostering growth and stability.

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Cash flow strategies for small business success