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Cash flow can be unpredictable. Things out of your control change the way money moves through your business, such as a rise in the cost of materials or seasonal fluctuations.

By making small adjustments, your business can stay resilient to change. For example, if your business or industry has known quiet periods, then plan to have enough cash to get through them.

Before you decide on adjustments, test them out by:

1. Get your pricing right

To get your prices right, you need to know how much it costs to produce your goods or services and their value. You also need to know who your customers are and what they’re willing to pay.

  • Work out how much margin you need from your sales to cover your costs.
  • Focus on your most profitable customers, products or services. If customers only want part of what you offer, focus on that.
  • See if you can increase your prices without losing business. You can monitor the change in prices for some products and services by checking the consumer price index (CPI).

2. Increase your sales

Sales growth is crucial to the survival and growth of your business. Get more sales by offering something new, expanding your market or improving the way you sell.

  • Look for other problems you can solve for your customers.
  • Reach new customers through a marketing campaign, sales promotion and social media.
  • Add online sales as a way for customers to buy from you (if you don’t already do this).
  • Offer customers new ways to pay. For example, buy now, pay later services.
  • Convert more enquiries into sales by improving how you communicate with customers.
  • Offer markdowns on full price goods or services.

3. Collect cash owed to you faster

Collecting payments from customers faster frees up your cash. Managing your invoicing and debtors helps you get paid sooner and prevent bad debts.

  • Use accounting software to automate your invoicing and send them earlier. You can use eInvoicing if the invoice is for a supplier, contractor or the government.
  • Update your payment terms. Encourage upfront or early payment with discounts, late fees and deposits for special orders.
  • Chase up outstanding payments when your customers haven't paid you.

4. Review your costs

Reviewing your costs regularly can help you save money, especially as costs rise.

There are some costs you can’t avoid, but small changes can make a big difference.

  • Cut out any costs you can do without.
  • Arrange a payment plan for larger costs.
  • Shop around for cheaper energy deals.
  • Switch banks, suppliers or insurance companies if it saves you money.
  • Combine your current debts into a low-interest, low-fee product or get a better deal elsewhere.

5. Employ the right people

Employing the right people at the right time supports you and sets you up to grow.

Before you hire someone, make sure you check the total cost of employing them, including their pay, leave and entitlements.

  • Stay flexible with employment options. For example, match your roster to peak periods and outsource tasks if you only need specialist skills for a short time.
  • Reward staff for improving your cash flow, such as reaching sales targets. If you pay them a commission, wait until the customer pays first.
  • Save on hiring costs. Keep people by offering development and training and a healthy work-life balance.

6. Manage your inventory

The more unsold stock you have, the less money you have. Forecasting your customers’ needs and buying stock at the right price and time frees up cash and shelf space.

  • Reduce costs by making sure your stock levels are not too high.
  • Use an inventory management system to automate your ordering. This can also reduce the time between placing and receiving your orders.
  • Clear out stock that isn’t selling, is out of date or is no longer useful.
  • Negotiate better terms with suppliers. If you go with a cheaper supplier, make sure you’re not compromising on quality.
  • Consider only buying stock when a customer places an order, instead of keeping it on hand.

7. Make your assets work for you

Assets can cost a lot – like vehicles, equipment or property. If you’re not using them, you could put the money they cost to better use.

  • Lease or hire an asset to spread out the cost, especially if you only need it for a short time.
  • Refinance your assets, but only if you can get better terms from a lender.
  • Sell assets you no longer need to free up cash.

8. Get advice from a professional

Talk to an accountant or business adviser. They can help you understand your cash flow better and find improvements to suit your business.

Free online cash flow courses

The Australian Taxation Office (ATO) has courses to help small businesses improve their cash flow.

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