Drawing from our experience as a tradesmen accountant in South Perth who has worked with hundreds of trade businesses, we understand the day-to-day challenges you face.
We witnessed first and how incredibly overwhelming it is for our clients to juggle tax obligations, job management, sales and marketing, dealing with suppliers, and completing jobs. With so much on your plate, it is understandable if you don’t pay as much attention to your finances as you need to.
If you’re like most of the tradies we work with, you’ve likely been too busy running your business that it took a while for you to have the time to look into your finances only to realise that a number of your clients haven’t paid you yet.
We cannot stress enough how important it is to keep track of your cash flow and ensuring that money is rolling in. So here are some simple cash flow tips you can start doing today.
Set a budget and make informed business decisions
If you have a budget for different costs ready, it will be easier for you to decide if you have room in your budget for a certain expense. With updated financial information, you can easily avoid impulsive decisions.
Track where your money goes
Keep a close eye on the money that is going in and out of your business so there will be no nasty surprises. Having a good grasp of your cash inflows and outflows can help you decide where you can cut costs.
By using a reliable cloud accounting system, you can easily keep track of your money, be alerted if certain bills are due soon, and automatically pay these bills.
Aside from bills payment, tools can be used to make invoice creation a breeze and easily collect payments from clients. When your clients are billed sooner, you can get paid more quickly. If there are late payments, you can arrange for emails to be sent out automatically on a recurring basis until the overdue bills are paid.
Encourage faster payments from clients
Your cash flow will suffer if you have too many clients who don’t pay on time. Aside from chasing overdue invoices, you can also encourage faster payments by offering different payment options. You can offer direct deposits, credit card payments, PayPal, BPAY, or any other type of payment you and your clients feel comfortable with.
When creating invoices, it is recommended to have the payment terms printed in easy-to-read font and in a prominent position on the document. Also, make sure to discuss your payment terms with clients upfront and get them to sign as an acknowledgement of these terms.
A lot of tradesmen end up with cash flow troubles because construction firms they work with owe them thousands of dollars. Prevent this from happening to you by being wary about allowing them to pay 30 days or more after the completion of the job, if they don’t have a record of making timely payments. For new relationships, it’s also recommended to start with shorter payment terms and extend it later on when trust has been established.
Negotiate with your suppliers
Try to negotiate with suppliers for longer payment terms, discounts for large amounts of purchases, or being able to return materials you end up not using. If you’ve been working with the same suppliers on a regular basis, they will likely be willing to provide you with better terms.
Getting Help From Cash Flow Experts
While these tips can help you improve your cash flow, you may find working with a tradesmen accountant in Perth more beneficial for your business.
For years, Linc Accountants Perth has been partnering with small business owners, particularly tradies, to help them with the finance-side of their business.
Aside from cash flow management, we also offer accounting and bookkeeping services, tax planning, preparation and filing of tax returns, dealing with the ATO on your behalf, payroll, SMSF, and business advisory. So if you need to keep your finances on track, Linc Accountants is your one-stop-shop for all your business needs.
Get in touch with us today so we can work out a plan!