Keeping your cashflow strong in a tough economic climate

In a tough economy, small businesses are particularly vulnerable, with overheads and wages that still need to be paid, despite slow sales. To help you weather tighter economic times a bit of pre-planning and proactiveness can make all the difference. You’ll need to have a clear picture of your payroll and any other planned expenses. If running those numbers means there’s a possibility of a shortfall, it’s important to meet this head-on and not hope it works itself out. This could mean talking to your supplier(s) or creditors to figure out an arrangement, or re-evaluating other business outgoings to ensure that the business and staff won’t suffer.

Minimise the stress of cash-flow

Invoice early

• Send any invoices that you can, and in advance if possible. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make a purchase from you in advance

Chase payment

• Use this opportunity to chase up any outstanding payments. Strong communication and relationships matter - talk to clients and chase invoices.

Talk to suppliers

A little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship.

Review Inventory

• Are you holding a lot of inventory? Could you devise a way to hold less inventory that won’t affect your ability to do business. Could you switch suppliers for some products, to reduce shipping costs and allow you to hold less inventory at a time?

Review your costs

• It’s a good idea to do a general review of expenses. Business costs can creep up, and it’s a great idea to make a time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs. There may be travel, functions or purchases which you can decide to take an alternative approach to.

Talk to us

If you predict cashflow could be tight, talk to us about ways to implement strategies to protect your business for the long term and help you alleviate cashflow worries.