1 in 5 small businesses ended up in their overdrafts relying on their overdrafts as a financial crutch last year. With more than £20 billion pound’s worth of late payments outstanding, this is being cited as one of the main reasons so many businesses are winding up in the red so often.
A lack of options is perhaps responsible, with the Federation of Small Businesses (FSB) revealing that 40% of business owners find other funding options available to them just too costly. We share a few tips on helping ease pressure on cash flow.
Don’t have an overdraft in the first place
Sounds obvious, and probably more than a little trite. But, if you think having the short-term fix of an overdraft is going to cause long-term issues for your business, then it’s advisable to consider alternative ways to keep your cash flow running fluidly.
Consider how long it will take you to repay the overdraft and at what cost – there may be other types of funding which are more appropriate for dealing with cash flow issues.
Be meticulous with your bookkeeping
If you don’t have your affairs in order, you can’t possibly be in a strong position to spot issues with cash flow or spending patterns over time.
Bookkeeping processes have come on leaps and bounds over the decades, with many being available on the go through intuitive, cloud-based software. Yep, just like Pandle! We even have a Cash Flow Forecasting feature.
Whatever method you use, reviewing pinch points in your business’s finances can help with future planning, as can monitoring upcoming bills and other liabilities.
Get an accountant
As a business owner, you’ve got about two million things to think about all the time so it’s easy for stuff like submissions, paperwork and deadlines to get overlooked. We’re only human after all.
Having a qualified professional in your corner to make sure this doesn’t happen will improve the health of your finances and consequently, help you stay away from your overdraft.
Audit your overheads on a regular basis
Regularly taking a step back and assessing where your money is coming and going from is a great way to keep control of cash flow. Spot places where you can cut costs or reduce overheads, such as alternative utility providers, letting staff work from home more often, and chasing up those late payments!
If you would like to speak to us about how our simple, cloud-based bookkeeping software could support your business, just select the Live Chat button on screen.