{"id":45010,"date":"2023-10-20T15:40:23","date_gmt":"2023-10-20T15:40:23","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/manage-your-cash-flow-like-a-pro-in-the-first-year-startupsmart\/"},"modified":"2023-10-20T15:40:23","modified_gmt":"2023-10-20T15:40:23","slug":"manage-your-cash-flow-like-a-pro-in-the-first-year-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/manage-your-cash-flow-like-a-pro-in-the-first-year-startupsmart\/","title":{"rendered":"Manage your cash flow like a pro in the first year – StartupSmart"},"content":{"rendered":"
\"\"<\/div>\n

Whether you\u2019re learning about the importance of cash flow by experience or by error, here are several ways to navigate the tricky issue in your early stages of business<\/p>\n

 <\/p>\n

1.Manage slow payment times<\/h3>\n

 <\/p>\n

If there\u2019s one factor that affects a startup just as much as a large corporation in Australia, it\u2019s that invoice payment times are getting longer. The latest research from Dun & Bradstreet\u2019s Trade Payments Analysis now shows that invoices take an average of 56 days to be paid \u2013the slowest rate in three years. So how do you avoid this problem, especially when \u2018cash is king\u2019?<\/p>\n

 <\/p>\n

According to Dun & Bradstreet CEO Gareth Jones, there are two things you can do.<\/p>\n

 <\/p>\n

\u201cYou can build incentives and discounts for early payment into your pricing model, or you can make it clear there are repercussions, like interest on the amount outstanding, for those who don\u2019t pay within your timeframe,\u201d he says. \u201cIt all comes back to your credit policy.\u201d<\/p>\n

 <\/p>\n

 <\/p>\n

2.Have a clear credit policy<\/h3>\n

 <\/p>\n

 <\/p>\n

As Jones outlines, a clear credit policy is essential for every startup but he says many people don\u2019t think it through upfront.<\/p>\n

 <\/p>\n

\u201cYou must have a clear policy around how you\u2019re going to extend credit to your customers,\u201d he says. \u201cIt needs to take into account the cycle of your outgoings versus your proposed income. Your credit policy must reflect when you see income arriving and therefore cash arriving, against your outgoings in terms of buying goods from suppliers and other business expenses.\u201d<\/p>\n

 <\/p>\n

 <\/p>\n

3.Hold onto your cash for longer, and plan ahead<\/h3>\n

 <\/p>\n

 <\/p>\n

It\u2019s also important as a startup to keep cash in your bank account for as long as possible, so you\u2019re prepared for unexpected challenges.<\/p>\n

 <\/p>\n

\u201cNo matter what you plan for, something will happen that you\u2019re not aware of,\u201d says Kevin Moore, retail expert and chairman of Crossmark Asia-Pacific Holdings.<\/p>\n

 <\/p>\n

\u201cA plan is great to say \u2018this is the number I want to get to, this is how much I want to turn over, and this is how much I want my costs to be. If you\u2019re continually checking against it, you can say, \u2018I think we\u2019re off track and we need to do something about it\u2019 before it gets out of hand.\u201d<\/p>\n

 <\/p>\n

 <\/p>\n

4.Negotiate favourable payment terms<\/h3>\n

 <\/p>\n

 <\/p>\n

Moore also recommends that you negotiate favourable payment terms as a strategy for holding onto your cash for longer.<\/p>\n

 <\/p>\n

\u201cMake sure your payment terms are the best they can possibly be. I know it\u2019s difficult, but you have to be strong in this area. Whether you can get 15, 30, 45 day terms, whatever you can get, make sure it\u2019s the best option for you. Large corporations have procurement departments whose role it is to use you as the bank, but if you\u2019ve got a good product or service, be strong in your negotiations.\u201d<\/p>\n

 <\/p>\n

 <\/p>\n

5.Efficient and accurate invoicing<\/h3>\n

 <\/p>\n

 <\/p>\n

In a similar vein, Jones recommends that you examine your invoicing process closely, to ensure you\u2019re not giving customers or suppliers a reason not to pay.<\/p>\n

 <\/p>\n

\u201cMake sure you have a good invoicing process. Often your customers or their credit departments will look for reasons not to pay, for example, you invoice them and they feel it\u2019s not accurate or there\u2019s mistakes on it. All of those things can delay payment and create cash flow issues. Don\u2019t give people a reason not to pay you,\u201d he says.<\/p>\n

 <\/p>\n

 <\/p>\n

6.Understand your finances<\/h3>\n

 <\/p>\n

 <\/p>\n

Entrepreneurs have many skills, and sometimes numbers isn\u2019t one of them. But that\u2019s not a reason to avoid the books altogether. Moore recommends that you keep it simple, and don\u2019t get confused with accounting speak like debtors and creditors.<\/p>\n

 <\/p>\n

\u201cLook at your payables, your receivables and your bank balance three times per week,\u201d he says.<\/p>\n

 <\/p>\n

\u201cThere\u2019s only three places your money can be if you\u2019re keeping your business together. That\u2019s in the bank, with your suppliers, or waiting to be paid by somebody. Stick to those three things and you\u2019ll have an accurate picture of what\u2019s going on with your cash flow.\u201d<\/p>\n

 <\/p>\n

 <\/p>\n

7.Ask for or hire help<\/h3>\n

 <\/p>\n

 <\/p>\n

Moore also recommends that you be diligent with your monthly P&L and balance sheet review. \u201cSpend 60 minutes minimum on it, and understand what the numbers mean to your cash over the next 90 days.\u201d If you\u2019re not up to this task, don\u2019t be afraid to ask for, or hire, help.<\/p>\n

 <\/p>\n

\u201cOnce you get a bit bigger, the best thing you can possibly do is employ a really good accounts receivable person,\u201d says Moore. \u201cDon\u2019t get hung up on someone who\u2019s just a bookkeeper or just an accountant. You want someone that\u2019s numerate, confident and a communicator, because they\u2019re asking for money over and over again.\u201d<\/p>\n

 <\/p>\n

Written by: Megan Gamble<\/p>\n

 <\/p>\n

 <\/p>\n

This article is sponsored by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ). The views and recommendations that are made in this document are those of the author and not ANZ. To the extent permitted by law, ANZ disclaims liability or responsibility to any person for any direct or indirect loss or damage that may result from any act or omission by any person in relation to this material..<\/span><\/em><\/p>\n

 <\/p>\n

\n

Success starts here<\/em><\/strong><\/p>\n

If you\u2019re thinking of starting a small business, or have recently launched one, you want to do everything you can to ensure its success. Visit the $2 Billion Lending Pledge to find your local ANZ Small Business Specialist and get an indication of how much you could borrow.<\/em><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

Whether you\u2019re learning about the importance of cash flow by experience or by error, here are several ways to navigate<\/p>\n","protected":false},"author":1,"featured_media":58961,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/45010"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=45010"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/45010\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/58961"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=45010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=45010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=45010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}