With your tech startup underway for a while, perhaps you're going through a tough time this summer with competitors taking your business away. While it's likely temporary with your growth plans in sight, going through tough times can wreak havoc on your cash flow.
As we all know, maintaining cash flow is absolutely essential to keep business operations going. What can you do to keep cash coming in and become a cash flow champion?
It's possible with some astute financial strategies.
Creating Clear Reports on Projected Cash Flow
You may not know exactly what your cash flow projections are until putting together projection reports. Work with a quality accountant to look ahead on what monies are due to your tech vendors within a set period of time. Also, consider apps like Float as a way to automatically generate reports with easy accessibility.
For SaaS projections, use Chart Mogul for efficient business intelligence. With this, you can track cash and monthly revenue.
What's important is to make your reports as precise as possible to eliminate second-guessing.
Obtain Payments Faster
One strategic way to get cash flow in is find ways to make payments come in sooner than later. You can do this by encouraging your customers to pay their invoices early for the tech services you provide. Giving them cash discounts for paying early helps. So does giving them a personal or automated call if their invoice payment becomes late.
If you offer an SaaS platform, you're already in position to allow users to pay upfront on a monthly basis. Apps like Recurly, Go Cardless, and Stripe makes users pay their subscriptions regularly and on time.
Don't wait 48 or more days to get a payment, especially as a startup. Create policies where customers need to pay within at least 30 days. Electronic or mobile payments are a good way to make this easier for everyone, which can align well when offering SaaS services.
Opening a Business Line of Credit
Many UK based lenders like Growth Street are available to let you open a business line of credit, or a flexible loan arrangement. Early stage businesses do this often, and you only pay interest on what you borrow. At places like MarketInvoice, you're able to draw down funds or gain cash advances any time things come to a standstill.
In times when no other options exist for your tech startup, these lines of credit are ideal. Every drawdown you take out is basically a separate loan based on a credit limit.
Hiring a Financial Advisor
Don't be too proud to outsource a financial advisor to keep your cash flow properly managed. Doing so takes away the burdens of your own team. After all, they may have enough pressures dealing with how much you've spent on technology or other tech assets to keep your service competitive.
Here at The Accountancy Cloud, we provide complete financial and tax advice with focus on tech startups. Contact us so we can help you find a path to controlling your cash flow when times become challenging.