The current business environment is a challenging one, with difficult economic conditions creating cashflow challenges that can limit business growth.
Here’s a 10-point checklist for how businesses can review their financial position and strategies for growth for the new financial year.
1. Refresh your vision of success
Take a measured look at your business as it stands – where are the opportunities for growth? What can be improved upon? Explore ways of optimising your current business, or creating new products or services for your current customers. Identifying concrete goals and objectives to guide your business through the new financial year is an important way of improving your chances of achieving these objectives.
2. Don’t neglect administration
Creating an organised filing system for paperwork and invoices can take the headache out of credit management. Disposing of outdated paperwork and staying on top of sales ledger entries, credit notes and adjustments will help to prevent cashflow problems from occurring and ensure your business is organised and capable of achieving growth.
3. Do your credit-checks
While new business prospects are particularly exciting in the current business environment, always ensure you carry out credit checks on new customers. This will allow you to identify trends in their repayment behaviour and avoid any payment issues in the future. Credit checks can be done quickly and relatively inexpensively. Circumstances affecting existing customers are constantly changing, so it is also worth regularly reviewing their status.
According to the February Bibby Barometer Small Business Survey, currently only 20 percent of small businesses regularly conduct credit checks.
4. Manage your customer relationships
Be sure to maintain open lines of communication between your business and its customers, ensuring that you continue to refine customer service standards. Maintaining a close relationship with your customers will help establish a reliable source of sales revenue and minimise issues with repayments.
5. Ensure invoices are issued in a timely fashion
Timely issuance of invoices is the cornerstone of a healthy business cashflow. Our Bibby Barometer research showed that half of Australia’s SMEs are experiencing delays compared to a year ago, and so invoices that are issued early and are diligently followed up will allow your debtors plenty of notice to pay their receivables, improving your cashflow.
6. Keep tabs on your competitors
Knowledge is power, and keeping track of who your competitors are and what products and services they offer will give you the power to stand out in the crowd. Keep abreast of news and developments within your industry and take note of any new trends. This knowledge will give you the knowledge you need to refine your competitive advantage and achieve growth for your business.
7. Get the best from your suppliers
Assess your suppliers and confirm that you are getting the maximum value for money that the market permits, comparing rates and prices from other suppliers to ensure that you are minimising your operating expenses. Take particular note of any special deals or discounts on offer and try to negotiate longer credit terms. However, a loyal supplier may prove to be a useful ally during tough times, so don’t forget the importance of establishing and maintaining close relationships.
8. Why not try debtor finance?
Cashflow is an essential indicator of the health of your business. Sticking to cashflow budgets and ensuring invoices are paid in a timely fashion is paramount. If your cashflow is limiting your working capital, look into alternative forms of financing. Some 34 percent of small businesses report that they are more likely to consider non-bank finance in the current economic climate. For example, debtor finance providers can pay up to 85 percent of outstanding invoices usually within 24 hours and also follow up your debtors for you.
9. Get your return in early
Don’t put off your tax return until the deadline is looming, get it underway as soon as is practical to get a more accurate picture of your cashflow heading into the financial year so you can concentrate on growing your business. Make sure your accountant has the transactional records they need to complete your return.
10. Take time out and celebrate your success
Take time out of your busy schedule to enjoy and reflect on your successes along the way, as surviving in the current economy is a sign of success. Running a small business is stressful and there are many challenges along the way. Taking a well-earned break will allow you to renew your energy and focus for the year ahead. Employees too are at their most productive when they feel valued and acknowledged, so reward your team for achieving their objectives with inexpensive staff events during the course of the year.
