Good to Great: How to Scale With an Outsourced CFO

Without a firm grip on where your money comes from and where it goes, your cash flow can be unpredictable. As a business owner, you need trustworthy financial information with which you can depend on.

 

Cash is the fuel that keeps your business motoring along. If your source of money is touch and go, your company can’t operate smoothly and efficiently. In this post, we’ll take a look at ten useful tips for getting an interrupted cash flow back on track.

 

1 - Prepare and maintain a cash flow forecast

One tried-and-true method for getting back on track is preparing and maintaining an accurate cash flow forecast. When you can anticipate future costs, you can make adjustments as necessary to avoid unpleasant surprises.

 

Cash flow forecasts can be updated weekly to provide accurate outlooks for the next three, six or twelve months. With accurate predictions at your fingertips, you’re in a great position to make on-the-spot decisions regarding pricing, hiring, purchasing and more.

 

2 - Establish clear payment terms

Ambiguity is one of cash flow’s biggest enemies. Establishing clear payment terms with your clients is essential, but we appreciate not always easy. If you don’t know when you’ll be paid, you can’t create accurate forecasts or match the timing of your debtor receipts with the payment of your creditors.

 

In most industries, 30-day payment terms are the norm. However, we know that we rarely live in a perfect world and sticking to exact payment terms isn’t easy. It’s important that you therefore have resources available who can regularly enforce payment terms and follow up on any overdue debtors.

 

3 - Invoice right away

The sooner you get your payments, the more efficiently your cash flow will hum along. Which means we need to be efficient in raising our invoices to clients. This is one area that is entirely within our control, so get good at it!

 

Consider instituting a policy that invoices customers immediately following completion of a project or sale. This may mean implementing a new system or process, but with technology today, these processes can be automated almost entirely!

 

4 - Offer periodic payment packages

Another way to get your cash flow back on track is to offer regular payment packages to your clients. Instead of billing by the hour or by the project, negotiate retainer plans so you can always predict your cash flow. With periodic payment packages, you can bill upfront, which allows you to plan your spending more strategically.

 

5 - Make payment easy for your clients

Want to help your customers pay more quickly? Make payment as easy as possible. Offer online payment or even automatic payments, so your customers don’t have to take multiple steps to settle their bills.

 

 

6 - Minimise your debtor days

If your business is upside down with your cash flow, turn it around by minimising the gap between invoicing and payment. One excellent way to do this is to establish direct debit as a business norm for bill collection. With direct debit, you can scale create a more stable cash inflow.

 

7- Move to cloud-based accounting

Technology makes it easier to improve your cash flow and stay on track. With cloud-based accounting, for example, you can check in with your financial situation at any time and from anywhere. The key is to have reliable accounting software and advice at your fingertips at all times.

 

8 - Focus on the flow

Many business owners keep their eyes firmly fixed on profits, but while they’re looking at their profit numbers, cash flow falls by the wayside. Turn things around by focusing on cash flow. When your cash flow is working, profits will follow and your forecasting will become a lot more predictable. 

 

9 - Look at the big picture

While it’s essential to have a cash flow forecast for your business, it’s also imperative to have a comprehensive budget. A benchmark of what you should be spending and knowing when you’ve blown a budget part way through the year. Blowing budgets only means one thing for your cashflow, cash deficit.

 

10 - Outsource CFO services

When you outsource CFO services, you can significantly lighten your load and aim your business in the direction you want it to go. You may not need a full-time, in-house CFO. You may, however, need a financial expert to help you to turn things around and capitalise on all the hard work you’ve put into your company. Part-time CFO services might be just the solution you require.

 

An outsourced CFO can help you to get your cash flow back on track as well as guiding your business in other important ways. To learn more about CFO services, or to discuss any of your other business concerns, reach out to us at Altus. We’re here to help you succeed!