A successful business needs to keep the balance between money coming in and money going out weighted on the side of the former.

Thinking of good cashflow as a balancing act can be a useful metaphor. Your instinct may be to tip the scales heavily in favour of maximising the amount of cash you have.

It might be a better option to use your money to buy assets or equipment that will help you increase your sales.

Conversely, if your monthly outgoings are roughly equivalent to your incomings then you may not have the resources at your disposal to capitalise on opportunities.

Good cashflow management will also give you a clearer picture of your ability to take out and repay loans.

Achieving and managing the kind of cashflow that is suited to your business is crucial to its long-term survival and its ability to evolve and grow.

There is no one-size-fits all solution for improving cashflow, but the following points are some common strategies:

Payment terms - Your relationship with your customers is vital for any business and agreeing payment terms in writing in advance can help ensure continued good will.

Invoice correctly - An effective invoice contains all of the relevant information that a customer needs to know in a concise and easy to read format.

Cut your costs - The most obvious way of improving your cashflow is to control your outgoings. Bear in mind that reducing costs too far may negatively affect your cashflow by hurting your ability to make sales, maintain relationships or incentivise your staff.

Discounts - Just as you may want to reward good customers, your suppliers may want to do the same to you. Making sure you pay promptly will allow you to negotiate better deals or discounts for early or fast payments. Having a strong relationship also means telling suppliers as early as possible if a payment is going to be delayed.

Tax efficiency - A firm’s tax liability is likely to be a large part of its regular outgoings so any actions that increase tax efficiency will affect cashflow.

Cashflow forecasting - Being able to accurately forecast your cashflow over a long period of time is incredibly valuable. If your business is seasonal in nature or has busy periods, you will be able to plan accordingly.

Contact Jill Campbell at JWPCreers for further advice on 01904 717260 or email jlc@jwpcreers.co.uk