Having a healthy profit on paper is great, but for a small business to survive at the moment there needs to be enough cash coming in to allow all of the bills to be paid. Ensuring this happens is what we mean by “cash flow management”.  So here are our top tips for better cash flow in your business:

•    Know your numbers
By keeping your book-keeping up to date and writing a simple monthly cash plan you will know in advance if there are going to be cash flow problems.

•    Avoid fines
Late payment fines add up really fast and are unnecessary costs – if you send accounts late to Companies House they can charge you up to £1500! Knowing when accounts and paperwork are due can save thousands.

•    Collect your debts
Debt collection CAN be done without upsetting your customers, How about a friendly note on the day the debt is due with a follow up call a few days later?

•    Pay tax at the right time
Making sure you don’t pay tax late saves fines and interest, but if you get your accounts done early then you can plan for when you need to pay the tax over. Consider putting money aside in a separate bank account. You can also use the cash accounting for VAT scheme to pay over VAT only when its been paid to you. Ask your accountant or bookkeeper for more information.