22 Finance, Legal & Accounting
12TH FEBRUARY 2024 BUSINESS GUIDE DISTRIBUTED WITH
How to manage cash flow to meet your 2024 business resolutions
Jo Copestake, Xero’s UK Sales Director, advises
A new year is the perfect time for small business owners to take stock of the last twelve months and look for new ways to meet their goals. Te ‘Money Matters’ study by accounting software provider Xero found that half of owners worry about
their financial future, and
nearly three-quarters (72%) have experienced cash flow issues over the last 12 months. Looking at new ways to monitor and manage cash flow should be high on any small business’s list of resolutions. Considering 82% of small business
owners who experience cash flow issues are affected by stress, and 80% by anxiety, addressing this early in the year can improve the bottom line and — most importantly — owners’ personal lives. So, what can you do to better manage cash flow in 2024?
Don’t ignore late payments Late payments, or ‘unapproved debt’, as Xero prefers to call them, have a detrimental impact on a small busi- ness’s cash flow. Unfortunately, it happens far too often, with small businesses waiting the longest time in three years for invoices to be paid, according to the Xero Small Busi- ness Index. Not only does it affect cash flow, sometimes preventing businesses from paying staff, it also distracts them from focusing on growth, as they waste time chasing late payments. As Michele Ferron, owner of
stationery brand Once Upon a Tuesday, says, “Tis is something that has kept me awake at night — not knowing what our cash position is, so having a clear overview brings peace of mind, letting me focus on the exciting parts of the business.” Few small businesses currently
use accounting software to track their incoming finances. Apps such
“Using cash flow forecasting tools can help protect businesses from poor cash flow during challenging times, and can help owners react to real-time changes in their financial position”
as Chaser that integrate with your accounting soft- ware help automate the process of managing invoices, letting the software send reminders and chase payments for you. Tis saves busi- ness owners a huge amount of time.
Early planning prevents poor performance Developing financial plans early in the year can help businesses prepare for slower periods. Especially as many retailers have felt constrained on prices over the last year. Michele says, “We have not felt like we have been able to raise our prices due to the cost-of-living crisis, despite our suppliers raising theirs.”
Using cash flow forecasting
tools can help protect businesses from poor cash flow during chal- lenging times, and can help owners react to real-time changes in their financial position. For example, as Michele comments, “We don’t have fixed budgets, but work flexibly on product and marketing ideas first, and then work out if and how we can afford them.”
It’s time to embrace software Many small business owners put their inertia around adopting more
digital
tools down to a perceived
lack of relevance, while 26% prefer to manage payments using traditional methods or don’t think that enough of
their
“Xero helps us plan for the future and identify potential cash flow gaps before they become issues.” Leveraging technology can help
small businesses understand fore- casts and offer real-time insights on what is coming in and out of the business. Using these tools alongside working with an accountant will help businesses develop better strat- egies to manage cash flow and make life easier for themselves.
To find out more about managing your cash flow, visit:
xero.com/uk/cash-flow-support
customers use digital
payment methods to make adoption worthwhile. However, as Michele points out,
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