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Improve your cash flow with these handy tips print Print

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You’re in business to make money, and improving your cash flow is one of the best ways to do this. This guide offers some handy tips for giving your cash flow a boost.

Cash flow is the lifeblood of any business, and the aim of all business owners is to have more money coming in than going out.

From shortening your cash cycles to managing debt, there are several methods for getting on top of your cash flow. And once you’ve got it firmly in hand and shown it who’s boss, you’ll experience greater freedom and opportunities to grow your business - a healthy cash flow means you’ll have working capital to reinvest in your business and sustain its competitive edge.

So how can you generate more cash in your business?

Tips for cash flow

Set a cash goal

Before you do anything else, you need to know how much working capital or additional cash you need either to right the ship or to take your business where you want to. If you can’t measure your progress, you’re less likely to succeed in your goals, so carry out a costs analysis and use break even calculations to establish what needs to be achieved and by when.

Then write a cash flow forecast

Having a destination is one thing, getting there is another. A cash flow forecast is the primary tool you need to use to benchmark the journey. By forecasting your inflows and outflows of cash, and the surplus or deficits you’ll have left over, you’ll be better equipped to adjust course and stay on track. Read our article how to forecast cash flow accurately.

Shorten your cash cycles

What you don’t want are lengthy periods of time when your business goes without cash. That can lead to all sorts of problems from paying your creditors to keeping operations going. So you need to find ways to shorten your cash cycles, and we’ve got some tips for you:

  • Get paid immediately – you don’t have to send out invoices and chase them up. ANZ has a pay-on-the-spot solution – ANZ FastPay*. It’s an app for your smartphone that allows customers to pay you, as easily as they would on an EFTPOS terminal. And with next business day access to your takings, it means you’re not waiting till the end of the month for the cash to show up in your account. Because let’s face it – money in the bank’s more use to you than a cheque in the mail.
  • Encourage early payment – if you still need to invoice, do it early. Don’t wait for the end of the month. ‘Payment by 20th of next month’ is not a term of trade that’s set in stone. And provide incentives to your customers to encourage them to pay early. For example, some businesses offer a small discount for paying within 10 days of an invoice date. A discount of around two per cent for payment within 10 days could be an effective option that won’t leave you too out of pocket. Read more on how to encourage early payment and ensure you get paid.

Reassess your costs

Try not to make assumptions around costs in your cash flow forecast; you may be missing a hidden cost or basing your figures on outdated information. Even inflation can play its part: costs often slowly creep up over time. For these reasons you need to regularly compare your forecast with actual cost figures and frequently check the pricing offered by alternative suppliers. That’s why we have columns for forecast and actual figures in our cash flow forecast template.

Reassess your pricing

It can be a bit scary to consider raising prices, but only if you assume your target market is price sensitive and your goal is to be a price leader. Market research will help you work out the actual price tolerance your target market has for your product or service and what their alternative choices are. Remember, competing on price is a well-worn strategy, but it often only works if you can bulk-buy from suppliers at a lower cost. A better option can be to compete on quality, which will justify charging a higher price.

Read more about this in our article pricing strategy made easy.

Manage your creditors

If you’re having trouble paying your bills, don’t avoid your creditors – whether it’s your suppliers, your bank, the IRD or other creditors. Be proactive: be upfront with them and work with them to figure out ways to pay your debts more easily. In most cases they’ll do what they can to help you, just as you would if one of your customers had trouble paying by the deadline.

Find efficiencies

Technology is a wonderful thing, especially when it lowers your overheads. Do you really need all those capital assets, or to spend so much time travelling? Online connectivity is providing more people with better ways to do business every day. Many are doing away with bricks and mortar in favour of online retail, while businesses everywhere are cutting down on travel if meetings can be carried out on a Skype or FaceTime call.

Manage debt, protect your cash flow

Offering credit is often convenient and can help retain your best clients – but make sure you minimise all the potential hassles and risks that can go with it.

Keep these considerations in mind:

  • Run credit checks - don’t be tempted to skip this, or you risk exposing your business to bad debtors. You can do it without making new customers feel as if they’re under the microscope:
        • Ask them for details of other businesses they’ve received credit from, and call these businesses for references.
        • Check they’re legit at the Companies Office
        • If in doubt, seek help from agencies that specialise in performing credit checks.
  • Use credit limits – assess each customer on their merits, and set limits accordingly. Once they prove trustworthy, you can look at upping their limits.
  • Always have a contract – it doesn’t matter how trustworthy you think your customers are, they still need to sign on the dotted line so that your terms and conditions are clear.
  • Consistency is the key – always stick to your word and make sure you follow through with all set processes. There may be cases where you can show leniency, but make sure that customer is worth the risk when you do.
  • Put good systems in place – set up a debt management calendar, and keep on top of debtors with repeat meetings and reminders. Perhaps consider add-ons to accounting software that help automate the debtor collection process, such as Debtor Daddy.

Tools and resources 

Kick off your cash flow management with some of ANZ’s free tools and resources:




*ANZ FastPay is only available to approved merchants who meet ANZ’s credit approval criteria and have an ANZ Business Account. Terms, conditions and fees apply. Use of ANZ FastPay requires a cellular or wireless internet connection.

Cashflow forecast

Cash is the lifeblood of every business, which makes forecasting it an essential skill. Use this quick calculator to help ensure your forecasts are as accurate and reliable as possible.

download button-22 (Excel spreadsheet, 103kb)

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