Trying to run a business without managing cash flow is like trying to paddle a boat without an oar. Even if you succeed, it will be an upstream exercise guaranteed to wear you out. Cash flow is important for all businesses, but it is critical for early startups. If you cannot manage your cash flow within the first year, you will likely not survive the second year.
- A simple excel sheet will help you record actual cashflow and track it against the forecast. Don’t forget to include your BAS payments, super, GST and extra staff or stock for busy periods.
- Being vigilant about invoicing is key to managing cashflow. Issue invoices immediately once a project is finished, and make sure you follow up on overdue accounts.
- Practice good stock control by tracking and accounting all the items you sell, use or manufacture and finding the right suppliers for your business.
“Try and negotiate longer payment terms with your suppliers. For example, make your payment terms 30 days or less, and payables 60 to 90 days.”