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Top cashflow tips

Whether it’s managing invoices or offering flexible payments, find out how you could avoid common cashflow pitfalls. 

Tips for managing cashflow

Cashflow is critical for businesses large and small. Managed well, cashflow can help fund growth and provide support during difficult times. Managed poorly, it can cause serious problems for even the most promising businesses.

Managing cashflow needn’t be complicated and even if finance isn’t your strong point, there are simple strategies to help avoid the most common problems. 

1. Plan for payments

Set money aside from your business current account for bills (tax, utilities and so on) to avoid being caught short when payments are due – you can create multiple Barclays savings accounts for this and rename them to help you keep track.

Use a similar strategy to plan for those busy times you are able to forecast, or for when you’re thinking of expanding. Having spare cash on hand for extra staff, new equipment or fresh supplies could be the difference between being able to ramp up business to meet demand in peak periods and running out of money.

Businesses need money to grow. A £100k contract may boost turnover, but the invoice may not be paid for 60 days and a business might need £10k in the bank for cover in the meantime.

Ranjot Kaur, Barclays Business Direct Manager

2. Don’t overlook invoices

The sooner you invoice, the sooner you’re likely to be paid – so invoice as soon as a job or order is complete. You can send an invoice by email immediately using Barclays Invoicing1 – it’s free with Barclays Mobile Banking.

Payment terms on your invoices make it clear when you expect to be paid and don’t ignore overdue invoices. Don’t be afraid to chase unpaid invoices, either – late payments disrupt cashflow and could put your business at risk.

3. Offer flexible payments

Helping customers spread the cost of large purchases may encourage more sales and can ease cashflow – smaller timely payments are better than large late ones. Offering online card payments could also make payments easier for your customers – and the cash appears more quickly than payment by cheque.

 

Dealing with cashflow problems

Cashflow problems don’t always mean a business is struggling, but they can create difficulties even when business is booming. Fortunately, there are simple strategies to adopt here, too.

1. Talk to your suppliers

Just as offering customers payment terms can help with inbound cashflow, asking suppliers for credit terms can help with outbound cashflow. Suppliers are likely to be just as keen as you to keep cashflow smooth.

Bank finance can be used to pay for materials when cashflow is tight, but think about other options. Asking suppliers for credit means an overdraft facility can be saved for an emergency.

Carlton West, Barclays Business Direct Manager

2. Think about short and long-term finance

A business overdraft or credit card could be an effective way to deal with minor short-term problems, while an unsecured ‘cash flow finance’ loan could help for larger amounts.

3. Don’t forget foreign currency

If you regularly trade overseas, a foreign currency account can also insulate your business against currency fluctuations and make cashflow more predictable.

Keeping a close eye on cashflow and taking steps to resolve potential issues sooner, rather than later, plays a big part in keeping things running smoothly.

If cashflow ever looks like it’s going to be a problem, or if you’re struggling now, talk to us about your business banking options today.

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