Healthy cash flow is key to business success especially in the growth phase of a business and yet according to research, only 49% of UK small businesses are in this moment in time are cash flow positive; hard to believe we know.

There are many reasons why this stat is so high, and one of the main reasons is how small business collect payments from their clients or customers.  So how do businesses arrange their payment processes properly so that they can position themselves as cash flow positive most of the time, rather than rarely?

It’s never fun chasing clients or customers for cash, so why not consider using technology to help set-up and monitor & chase payments as part of your company’s payment processes?

Time to bring your payment processes into the present

As a small business owner you will be engrossed in the running of your business, working hard to attract and service your clients and build your brand, and although getting paid by clients will be high on your priority list you could easily find yourself chasing payments regularly and feel your precious time being wasted.

There are technological tools that you can use to help automate your payment processes and to help you keep focused on running your business and to help maintain your productivity levels.

So why is it that in a world of digital innovation only 52% of businesses still get their invoice paid through outdated methods like bank transfer?

A lack of liquidity in your small business means that you could have a cash flow gap now when paying your suppliers and covering expenses, a lack of cash to cover your operational overheads and not having cash flow to be able to plan or invest for your business’ future.

Running a small business and being innovative with businesses processes do not historically go hand in hand, but times are changing and accessing technological tools easily and affordably means that unpaid bills, strained customer relationships and poor cash flow can be a thing of the past.

Take control of your cash flow

Traditional payments from customers like bank transfer or a card payment, which most likely are subject to a fee by the bank or card issuer,  means you are reliant on your customers to pay you, leaving you vulnerable to late payments and potential loss of time chasing payments.  Alternatively, if you set up your customer payments via direct debit, where only a small fee is charged for the service, you are more in control of your payment pipeline and have both visibility and stability on regular income into your business.  Furthermore, if for any reason a direct debit is cancelled on the customer side, you will be notified by your bank.

Typically it takes over 40 days for a UK small business to get paid for a 30 day invoice so by setting up direct debits, this issue could easily be reduced.

There are a wealth of cash flow management apps and software available to you as a small business owner and some great ideas can be found here and for our clients, who have access and use QuickBooks in combination with their payment process tools, it frees up time for discussions on forecasting and budgeting and planning for the future.  No more wasting time on a regular basis chasing debtors, you can be firmly back in the driving seat for your small business

Mirandus Accountants can help

We are an accounting company in London and Edinburgh who are tax accountants for the self-employed and offer accountant services and tax advisory services for small business. You can contact us for a tailored solution to your unique business circumstances.

Whether you are an individual, freelancer, contractor or you run a small business, we can help to minimise your tax burden with our tax planning and tax advice services. That way, you can ensure you are only paying what you should be and nothing more.

We strongly recommend you speak with a tax and accounting specialist like Mirandus Accountants, who can provide expert advice for your business and personal tax planning needs.