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Heather Smith is an accountant and financial expert, who has worked with hundreds of start-ups and small businesses. Smith is also the author of a number of practical business advice and cloud accounting books.
Here are 10 of her top tips for managing cash flow and keeping your business on track:
1. Use business benchmark data for business insights. The Australian Taxation Office provides business benchmarks for more than 100 industries. This data allows you to see if your business is performing outside of these benchmarks and to make adjustments to your expenditure (for instance, renegotiating lower rent with your landlord) or to your income (for instance, raising your prices in line with your competitors).
2. Prepare an annual budget, taking into account quieter or busier periods. Business benchmarks and your own historical data can assist you in preparing budgets. A budget will help you evaluate your business’s performance and can also act as an early warning signal of any potential financial problems.
3. Accurately monitor your stock. Knowing exactly where you stand with stock helps you to deal with theft and any issues with warehouse processes, as well as identify slow-moving items.
4. Don’t ignore record keeping or accounting processes. In addition, be consistent in your approach. Checklists can help you stay on top of your numbers at all times of the year. Downloadable checklists are available online.
5. Minimise your expenditure. This is a critical component of business survival and cash flow. Plan for expenditure, stick to a budget and always assess your return on investment.
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Heather Smith is a business and accounting expert, who provides education, training and support to businesses across Australia. Smith is an expert in cloud accounting systems and author of Xero For Dummies.
6. Hold yourself accountable to business expenditure. You can do this by regularly discussing this expenditure with your accountant, business adviser or advisory board. This can also help identify new money-saving tips.
7. Get creative. Try to come up with ways to save your business money. Think about whether there is a way to borrow, co-share or rent an item, service or expense.
8. Be disciplined. Apply expense management guidelines to each and every purchase you make.
9. Maximise income. One way to do this is to ensure you get your pricing strategy right. Pricing strategies include cost-plus pricing, premium pricing and psychological pricing, which uses the customer's emotional response to encourage sales. Try different strategies to see which one results in a suitable profit.
10. Utilise experts. Use financial and accounting experts to help you set up the financial side of your business – and to keep it on track.
SecurePay’s Straightsell integrates e-commerce inventory with a business’s accounting software. This helps business owners to keep on top of their numbers.