Three ways to keep money flowing into your business

The headlines in Australia’s financial news are warning the nation could be slipping into its first recession in 28 years.
(SOURCE – https://www.news.com.au/finance/economy/australian-economy/australian-economy-weakest-in-a-decade/news-story/489d06b09ec07f1a63e1c580fc6fea9c_)

The nation’s economy is at its lowest level since the 2009 Global Financial Crisis, with data from the Australian Bureau of Statistics showing growth of just 0.4 per cent in the three months to March and in the last year only 1.8 per cent. In response, the Reserve Bank has slashed the official cash rate to a historical low while the newly elected Morrison Liberal government is promising tax cuts and spending to buoy the numbers up.

Regardless of whether the economy recovers or continues to slide, businesses still need to run. So to help you do that, here are three financial ways you can keep money flowing into your business no matter what the economy is doing.

1. Prepare a cash flow projection

Being prepared for a recession or even a dip in your numbers is always a good strategy. By preparing a cash flow projection, you can identify areas your business to focus on and act nimbly in response to any changes in the economy – you will be proactive instead of reactive.

Simply put, a cash flow projection indicates how cash is anticipated to flow in and out of your business depending on loans, contracts, payments and other factors. You can estimate your revenues and expenses, anticipating when the business might need a capital injection or a reordering of finances to cover any shortfalls.

By doing this kind of homework, you can prepare your business for any recession in the economy and also be on top of the details to take advantage of any growth opportunities.

2. Keep your books sharp

By keeping detailed records of your expenses, contracts, invoices and payments, proper bookkeeping will help you run a more efficient and nimble business able to weather any financial storms.

Automating the system with programmes like Xero can also relieve you of some of the burden, allowing you and your team to concentrate on sales, development and growth. Sydney Accounting are Xero Certified Advisors so can help out with any questions you may have about the system.

3. Speed up payments

Finally, it’s always wise to keep cash flowing in to your business through speeding up your invoicing process. Traditionally businesses in Australia give a month’s grace but tighter payment terms of a fortnight are becoming the norm.

With a faster payment timetable you will be able to increase cash flow to your business and have more options for money management. With a cash flow projection in your back pocket, well prepared books and faster payment conditions, your business will be better prepared for the financial downs and ready to take advantage of any rises that come.

Keep the money flowing into your business

For more information on any of the topics covered above, give Sydney Accounting a call today on (02) 9810 3222.