James Chillman, UK Country Manager for Fergus, offers five ways to improve your cashflow and looks at why job management software can better help you achieve these goals.
Having a positive cashflow indicates that your business has money left over after receiving payments on invoices and by paying all expenses incurred. On the other hand, a negative cashflow often suggests that the company is in a dangerous financial position as it may not be able to cover all associated running costs.
Monitoring your cashflow position is crucial to the success of your business. It enables you to meet your financial obligations and to better plan for the future. Unfortunately, many businesses have trouble managing cashflow for a variety of reasons, as it’s usually the last thing on their mind at the end of a busy day. Using a system to keep on top of your cashflow will help ensure your business is staying on track.
Let’s look at five ways you can better manage your cashflow:
1. Have a financial plan
Setting a budget makes a huge difference. Establishing a budget for the various costs over the year (such as marketing, supplies, transport, wages, etc.) can help to reduce on-the-fly decision-making and allows you to see if you have room in your finances to spend money in a certain area (or not).
2. Track your money
Avoid any nasty surprises by tracking your finances. Knowing where your money is coming from and where it is going can help you identify where you can cut costs each month or where you may be underquoting without realising.
The best way to track your money and stay on top of business finances is with job management software, allowing you to gain real-time visibility of your business finances at a glance.
3. Chase up invoices
Your positive cashflow will really suffer if clients aren’t being timely with payments. Aside from gaining a visual into your overall finances, job management software can encourage faster payments from customers by offering a variety of payment options.
A platform such as Fergus can also send automatic email or text alerts to remind customers of their overdue payments, all the while giving them the option to select their preferred way to pay. This helps you to get paid on time, speeding up your cash flow.
4. Plan ahead
Unfortunately, a lot of professionals end up with cashflow issues because they’re owed a lot of money from other construction firms who are lagging on their payments – not just clients and customers. One way you can save money, time and improve your cashflow is to talk to their suppliers prior to purchasing materials and negotiate their terms.
Enquire about product discounts, whether you can return materials that are unused or no longer needed and whether you’re applicable for longer payment options.
5. Forecast your cashflow
Cashflow forecasting involves estimating your future sales and expenses. The aim is to help you predict your cashflow on a month-to-month basis or for the whole year. Forecasting your cashflow can help to recession-proof your business because it will tell you if you’ll have enough money to run your business or expand it in the next 12 months.
Cashflow forecasting manually, without help from job management software, often leaves businesses encountering shortcomings as they don’t have sufficient data to properly predict rapid changes.
In essence, tracking cashflow and implementing a cashflow forecast helps to predict your future incomings and outgoings based on your current known costs and past revenue data.
To take advantage of a free Fergus job management software trial, click here
