Running a business is a constant juggle and managing cash flow can be tricky. For many small and medium Aussie business owners, the ideal scenario – paying suppliers as late as possible while receiving immediate payment from customers – simply isn’t realistic. Unlike larger companies with a steady stream of income, smaller businesses may find themselves in a constant balancing act.
With a stream of steady cash flow top of mind for many, Tyro has put together five handy tips to help ensure your money keeps flowing, while your business keeps growing.
1. Stay on top of invoicing
Send invoices promptly and follow up on late payments diligently. For existing customers, Tyro’s electronic invoicing is a powerful eCommerce tool that lets you generate, send, and track all your invoices in the one online location. This can help you to get paid on time and boost cash flow.
2. Find the inventory sweet spot
Holding too much stock can be a major cash flow drain. It ties up your money in products that may not sell quickly, leaving you with less cash for important things like marketing or growth initiatives. Get into the habit of regularly reviewing your inventory levels. This helps you identify slow-moving or overstocked items before they become a problem. Use your sales data and trends to forecast future demand (and future cash flow), saving you money in the long run. This ensures you order the right amount of stock to meet customer needs without ending up with excess inventory. Inventory management software or a simple forecasting system can be a valuable tool to manage this.
3. Don’t be afraid to renegotiate
Embrace your inner negotiator and revisit contracts with suppliers or service providers. Remember, loyalty is great, but so are competitive rates. Get a few quotes and leverage them to secure a better deal. Exploring extended payment terms can also free up cash flow in the short term, allowing you to invest in other areas. Regularly review your expenses to identify areas for savings, like unused subscriptions.
4. Use the power of real-time data
Good decision-making relies on having access to accurate and up-to-date information. Real-time data empowers you to make informed decisions about your cash flow, such as identifying potential shortfalls or optimising your spending. Tools like the Tyro App allow you to see your daily-takings and business performance across multiple locations, all in real-time. This gives you a clear picture of your current financial standing and helps you make informed decisions on the fly.
5. Build a cash flow buffer
Life (and business) is full of surprises. Having a healthy cash reserve acts as a safety net, protecting your business from unexpected expenses or seasonal slowdowns. Consider setting aside a portion of your profits regularly into an interest earning business bank account[IS1] before planning growth initiatives so that you have a backup when and if you need it. A general rule of thumb is to have about three months’ worth of operating expenses.
Cash flow management made easy
At Tyro, we offer a suite of tools designed to simplify cash flow management for Aussie businesses. From real-time transaction tracking to same day settlement options, we can help you take control of your finances and focus on what you do best – growing your business!
If you want to find out more about how Tyro can help you manage your business finances, visit tyro.com and start a conversation today.[IS2]
Disclaimer: Tyro provides this article for general information and educational purposes and does not take into account the financial situation or needs of any reader. The information provided must not be relied upon as financial product advice.
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