Cash flow is key for any business. With ongoing costs and outstanding invoices, it can be tricky for companies both big and small to stay on top of their finances. With around 5 million SMEs in the UK, it is said that around 38% struggle with cash flow and are left unable to pay their regular debts
Sure, there are some obvious ways to improve your cash flow such as having clear payment terms in your invoices (e.g 30 days) or using bank overdrafts and credit facilities, but our list below looks at some of the most intriguing and outside the box ways to benefit your cash flow position.
Pay staff via Paypal
Paying your staff’s wages can be one of the biggest overheads you have and be one of the biggest strains on your cash flow. If you run a small team, consider paying them via Paypal or Payoneer, since this can be connected to a credit card, giving you 30 extra days to pay it off and you can collect some nice points and air miles too.
With credit cards, you pay 0% if paid on time or you can make minimum repayments of just 10% – and whilst this is always advised, it can give you some flexibility and breathing space if you need it for your business.
Promote the remote!
2020 and 2021 have undoubtedly been the year of remote working, with more than 40% of the UK population working from home. But this can be a huge cost saver for your business and help you save money on office overheads (which costs the average SME around £1,500 per month) including rent, computers, insurance, refreshments and more.
Employees only need a laptop or computer to be able to work remotely and it is easy to stay in touch and on top of tasks using softwares like Monday.com, Slack, Asana and Zoom for video conferencing.
Finance and how you use it
There is nothing wrong with using finance to help stay on top of your cash flow, whether it is a merchant cash advance, business loan or invoice finance to give you an advance on outstanding invoices.
It is always important to do your homework and compare the best products for you, making sure that you can get low rates and flexibility to extend or pay early if you need to. If you have a profitable business and have been trading for over 2 years, this should give you access to very affordable business loans and low rates.
Where possible, you should try to avoid the dangers of payday loans and other high cost products including logbook loans or unauthorised overdrafts, since these can get sticky and the fees can add up very quickly.
Forward your expenses
Every business has expenses from paying suppliers, staff, office rent, materials and other bills. We have our quarterly VAT bills or our annual tax returns, but if you would like a bit more breathing space, consider paying for these after your returns are due.
So if you need to complete your returns by the end of April, consider only renewing some products or making purchases only in May, since this will help you spread the tax payment into the next quarter or calendar year, freeing up some cash flow for your business.
Pay staff on day rates
In 2021, the traditional 9 to 5 and 5 day working week is becoming less common, so have you considered only paying your staff on day rates?
Whilst we may have previously only thought of hiring people full-time, it is very common today to work 3 days a week at one place and 2 days a week at another. This can be a huge cost-saving exercise, especially since Friday can be a slow day for many and less productive.
You may find that employing staff for a few days here and there might also make them more productive, since they will want to complete various tasks during their days on.