No cash in account? Check your cash flow
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No cash in account? Check your cash flow

Everyone wants more money in the bank. Right?


If you're frustrated about slow cash flow and not sure what's causing it, there are a few things you can check.


Are you profitable? Checked your financials lately? If you haven't there could be some clues there as to why your cash is not flowing into the bank account. If there's no profit and there's a loss then that's a clue, if you've drawn more than you've made that will be an issue — if you don't know you need to find out. Make it a regular occurrence to check the numbers. It is in there that you will find ways to make changes to your profit.


Are you getting paid? Customers can sometimes be difficult to manage. We all have them and we all love them but if you have some that are slow payers then you might need to review your payment terms and maybe even the work you're doing for them.


Take some time out to look through the list of who still owes you money. You might also want to consider getting a deposit on engagement of a job and progress payments to cover some of the costs you might incur before you finish.


Are you paying too soon? Some people I know prefer to pay their suppliers straight away so they don't have to worry about bills at the end of the month. That's fine if you've got plenty of cash but your supplier terms are effectively free and useful credit. So it's okay to stick to the terms due but if you are going to pay them sooner why not ask them for a discount for doing so?


Are you buying assets with your cash? If you're buying gear, vehicles, computers and other costly equipment from your bank account it's going to hurt.


Expensive things usually last a long time and will earn their worth over the same period so you'd want to get some long term debt and keep your bank cash for operational costs such as wages, taxes, and paying yourself.


Jeremy Tauri is an associate at Plus Chartered Accountants.

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