BusinessDesk is proud to publish The Reset series, made in association with our trusted commercial partners and designed to supercharge your business in 2021. In this article ANZ looks at how to manage and maximise your business cash flow.
Cash flow management is all about managing the gap between when money comes in and when it goes out. The key is anticipating challenges before they happen and getting a plan in place in case the proverbial hits the fan. Read on for five ways to help improve your cash flow.
1. Shake it like a Polaroid picture: get a snapshot of your current status
You’ll need to know what state your business’s cash flow is in to get better and understand where you can make improvements. Use ANZ’s Cash Flow Forecast template to do this, but fill it in with your actual receipts and payments.
2. Go crystal ball gazing: forecast for the future
We don’t actually suggest using a crystal ball. But using the snapshot that you did in step 1, have a think about the future and what may change and what will stay the same. Some things to think about:
- Will your costs increase or decrease in the near future?
- Have you got any significant payments due (either in or out)?
- Is your business seasonal?
- Are you planning to change your prices?
- Are any of your suppliers planning to change their prices?
- Are there any internal or external forces that may be likely to increase or decrease sales (for example, a marketing campaign, or a new competitor in the market)?
Use the same ANZ’s Cash Flow Forecast template for this, but this time fill it in for the future.
If you can, this step might be worth bringing an expert like your accountant on board for.
3. Be a speed demon: increase your cash cycle
Getting cash through your doors faster will make your cash flow a whole lot healthier. Consider options like ANZ FastPay which can allow your business to accept payments on the spot through your mobile device anywhere, anytime.
If you need to invoice, send invoices immediately – don’t wait until the end of the month, or change your payment terms (there are no rules here!), or consider offering an incentive for early payment.
4. Nana says look after your pennies: reduce outgoings to increase profitability
No matter how much forecasting you do, if you’re spending money like it’s going out of fashion, your cash flow will never get better. Take a good hard look at where you’re spending and where you can save money (rent, travel, IT, packaging, etc).
5. Is it Sale of the Century or The Price is Right? Review your pricing
Pricing can seem at times like a 90s TV game show but for long-term viability, eliminate the guessing game and bring in the science. There are some great tools that can help you check your profit margin and understand where you will break even – check out ANZ’s article on getting your price right to get started. Keep an eye on competitors’ pricing too (but don’t feel like you need to undercut your competitors – a premium-quality product can command a higher price).
What to do next
If you want more help, check out ANZ’s cash flow and profit webinar for a full guide on how to go about managing your cash well.
Or, if you’d like to have a chat to an ANZ Business Banker for help and support updating your business plan, give ANZ a call on 0800 269 249.
This material is for information purposes only. Its content is intended to be of a general nature, does not take into account your financial situation or goals, and is not a personalised financial adviser service under the Financial Advisers Act 2008. It is recommended you seek advice from a financial adviser which takes into account your individual circumstances before you acquire a financial product. An ANZ Authorised Financial Adviser will, on request and free of charge, provide you with his or her disclosure statement prepared under the Financial Advisers Act 2008. If you wish to consult one of ANZ's financial advisers, please contact us on 0800 269 296.
ANZ FastPay is only available to approved merchants who meet ANZ's credit approval criteria. ANZ FastPay transactions must be settled into an ANZ Business Account. Eligibility criteria and fees apply. FastPay terms and conditions apply. Use of ANZ FastPay requires a compatible device and a cellular or wireless internet connection.
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