Cash flow constraints – 57 per cent of businesses warn of rising costs

57 per cent of small to medium-sized enterprises (SMEs) have warned of rising costs over the next quarter, according to Intuit QuickBooks’ latest Small Business Insights survey.

Given this startling figure, all businesses should take care to manage cash flow constraints caused by inflation.

Boost financial awareness across your staff

Financial awareness should not just be the preserve of your finance professionals.

Educating your whole team on spending and budgeting will equip them to handle future financial decisions.

Model different scenarios

Model different scenarios, such as supply chain issues or customer downturn, to ensure your financial forecasting is adaptable.

Although it is difficult to predict every scenario, preparing for a range of possibilities will help you to respond effectively to new challenges.

Review your numbers regularly

Schedule a regular review of your income and expenditure to help you spot problems, identify opportunities to cut costs, and assess the impact of external and internal changes.

Cloud accounting software can enhance these reviews by providing real-time data and insights into your finances.

Software can also save you valuable time and money by automating routine tasks, such as sending invoices and reminders.

Keep your credit under control

One of the single largest contributing factors to poor cash flow is outstanding payments from customers.

Improving your credit control process, including recognising outstanding payments and chasing them effectively, can help to ensure you have sufficient cash flow.

However, when it comes to persistent late payers, it may be worthwhile assessing their continued benefit as a customer and seeking redress sooner rather than later if they have a substantial amount outstanding.

Do not panic

Amidst the pressures of inflation and rising costs, it is important to stay calm.

Panicking will lead to rushed decisions that are unlikely to serve your business interests in the long run.

Instead, take a moment to step back and review the situation calmly with our expert accountants.

Protect your business against rising costs by contacting our cash flow experts today.