5 tips to increase your profits and cash flow

When you set up your business you probably aspired to have independence, the ability to control your own income and earn more, and the flexibility to create a work-life balance, but the reality can be very different. Do any of these situations describe you: 

 

 

If any of these sound familiar, then it’s time to take action and follow our 5 tips as your business should be working for you not the other way around. 

 

 

Although some of these actions may seem small, they all add up and can make a big difference. 

 

 

If you haven’t increased your prices in the last few years, then you are behind the curve as most businesses will have had to due to rising costs. You should review your prices regularly and compare them against your competitors. You shouldn’t try to be the cheapest as price is also an indicator of quality as well as value. 

 

Most people think if they increase their prices their customers will leave. That simply isn't true but any that do will be more than covered by the additional income from those that accepted the increase. See our blog on Tackling price increases for more information. 

 

 

It is often easy to over-service clients without realising it so it is important to track or review delivery against your contracts as scope creep will eat into your margins. Ensuring your employees are aware of what has been agreed and that they report additional requests or work is essential in capturing this. If you have incurred overruns or done additional work, make sure you bill for it or discuss extending the scope of work with the client. 

 

 

Ensuring that you get paid on time is crucial in improving your cash flow. You should first ensure that you send your invoices in a timely manner and make sure that they are correct. You should also chase up payment promptly so that you get paid on time. Don't leave cash on the table when you need it in your business. 

 

There are various software and tools that can assist you in automating your invoicing and credit control so that you don’t have to monitor and chase customer payments yourself. 

 

 

You should periodically review all your subscriptions and supply contracts to ensure that you are getting value for money and not paying for services that you no longer need. This is often the case with apps and software. Many businesses sign up for things and forget to cancel them at the end of a trial or don’t realise that the prices have been escalating and the original perceived value is no longer worth the cost or that there are better alternatives available. This can add up to thousands of pounds! 

 

 

Reducing your payroll costs can be tricky as it involves people whom you may not want to let down. But it is important to assess what your team are doing, whether they are fully utilised and whether they could be utilised better elsewhere in your business, and whether they deliver a return on their salary. 

 

You could also consider automating or outsourcing some activities to create efficiencies. Automating will save time on business administration, reduce costs and human error. You could for example automate raising and sending invoices, credit control, raising purchase invoices and making payments. Tools such as Xero and Dext are a couple of software tools that we use and would recommend. 

 

You could also outsource some of your finance roles for example, such as bookkeeping, payroll, credit control, management accounts and finance director responsibilities. This would allow you to benefit from expert services but only pay for them when you need them and not have the management and overhead costs of in-house staff. These are all services that we provide as virtual services. If you want to discuss any of these services, please contact us.