For many business owners managing profitability is a daunting task. We have come up with 5 simple tips to help you avoid company insolvency.
- Monitor your cash flow weekly
A cash flow helps you predict expected cash inflows and cash outflows over a period of time. It allows you to visualise which funds are available to pay off expenses and forecast what your bank balance will be at the end of every week. This is critical to make sure you will have enough money to pay payroll and pay the ATO and employee super. To ensure you have enough money to pay the ATO and employee super when it becomes due, we recommend that you transfer these amounts weekly into a separate bank account so they don’t get forgotten about.
- Prioritize payments
If your supplier gives you 60 days to make a payment, then use all of those 60 days. Do not feel rushed to make an early payment. This will allow you to use funds efficiently. Prioritise wages, suppliers, ATO payments and employee super. If you pay the ATO, or employee super late will have severe consequences such as personal liability.
- Incentivize your customers
To incentivize your customers to pay on time, we recommend that you give them early payment discounts or discounts on future orders. Collecting money from your clients on time will significantly improve your cash flow.
- Avoid interest
Try to pay any business credit in full to avoid interest. If you have a business loan, make sure you make the payments on time, to avoid any penalty interest.
- Manage your debtors
Make sure your customers know when their payment is due. You can send them notices or contact them leading up to the due date.
Always explore and understand your debt options before making a decision. Our friendly and professional insolvency specialists can help you do that. We offer a FREE initial consultation and expert advice. Please contact us on 1800 003 883 now.