Money saving ideas to improve your business cashflow

Expenses management. As a sole trader or small business owner you can offset a range of expenses against your tax. To minimise your tax bill, you need to keep track of your business spending and keep good records. Allowable expenses must meet HMRC’s requirement to be ‘wholly and exclusively for business’. One fast and effective way to cut unnecessary spending is to ask if it’s an allowable expense. If it isn’t, then perhaps you don’t need it. Importantly, to claim your expenses you must have receipts, either on paper or digitally. Make sure your processes include recording everything properly. 

 

Review statements. Bank reconciliation confirms you recognise income and expenditure and that the figures add up. However, your bank account and credit card statements can also show regular patterns of spending. Reviewing transactions over the last quarter or year could highlight repetitive spending for things you no longer need. These can include old software, online directories which have never brought you any business, or memberships you no longer need. It’s also worth reviewing how much you use subscription services and whether you can move to a lower cost option. You may even find you’re paying for multiple business tools that do the same thing. There may be a more streamlined option that costs less. You can create codes in accounting software like Xero to monitor and manage spending. 

 

Check your bank fees. Many businesses benefit from beneficial rates when they open a new account. However, fees and terms often change over time. It’s a good idea to confirm regularly you’re still receiving a good deal. You may find another type of account is better suited to your pattern of transactions. In many cases you can integrate your bank account with your accounting software, so keeping track is easy. 

 

Use your allowances. Small businesses may take advantage of a range of allowances to reduce tax bills. These include capital allowances for equipment, machinery and vehicles. You may qualify for research and development (R&D) tax relief or other financial or sector specific allowances. 

 

Monitor customer payments. Every business has customers who pay the moment they receive your invoice while others take their time. You can improve your cashflow by changing your terms from 30 to 14 days for payment, for example. You may also offer easy payment options like pay online as encouragement. Rather than spending time chasing payments, you can set up automatic reminders in your accounting software. 

 

Negotiate with suppliers. It’s important to keep good relationships with trusted supplies. However, a regular review of current prices, service levels and payment terms could highlight opportunities to reduce costs. It’s worth checking and then asking your suppliers to respond. 

 

Consider outsourcing. You can seamlessly outsource some business processes like payroll or bookkeeping. This can help you make better use of administrative teams or reduce costs for office space or employee costs, such as pensions and National Insurance.