Across the UK, the number of new companies registered last year rose by 5.7 per cent to over 660,000.
It’s a less talked-about fact that 60 per cent of those new businesses will go-under within three years, and 20 per cent will close their doors within just 12 months.
One of the largest contributing factors for many of these businesses shutting down is cash flow issues. Many individuals start their own business because they have a great idea and want financial independence. The problem is, they often have little to no experience managing cash flow in a business.
Take a look at our 4 essential financial tools to keep in your back pocket.
- Budget – The best way to control your spending is to limit it. At the beginning of each period, create a plan for how much revenue you should bring in, and how much of that revenue you will likely spend. This forecast gives you something to measure and track as your business progresses. If spending exceeds the budget, either find a way to increase your sales or cut your expenses.
- Bookkeeping Software – As a business owner, it’s vital that you know exactly how much money you have available at any point in time and what that money is being spent on. A bookkeeping system increases your financial visibility by organising all of your account information in one place. You can track invoices, accounts payable, and cash flow easily using one tool. This gives you a clear view of your financial situation.
- Merchant Services System – The easier you make it for customers to pay the better. An efficient purchase order system does this as well as tracks purchasing trends. This gives you more insight into customer interests and allows you to improve your inventory management – one of the more common places cash flow gets tied up and wasted.
- Invoice Finance For most business owners, there will be times when cash flow gets tight. However, bills still need to be paid. Invoice finance gives you immediate access to cash flow from unpaid invoices, allowing you to pay all your bills on time and keep cash flow balanced.
To discuss the funding options available to your business. Please do not hesitate to contact us on 0161 280 4220 or lynnew@regencyfactors.com
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