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Quick cash flow management tips for contractors

Cultivating good cash flow is crucial as a contractor. Lack a keen eye on your finances and you could be back in-house sharpish, and you don’t want that, what with Britain’s bosses getting nastier.

Despite this, some cash-flow management savvy is something that’s severely lacking in Britain’s  small business community. Countless startups, contractors and freelancers failing thanks to a lack of nous on the cash-flow front.

Post credit-crunch it’s become even more integral to keep on top of your cash flow, so to keep you on track, here’s some quick tips that should keep you in the black…

Firstly, keep cash flow in mind when agreeing your contract

Always keep in the mind the impact a contract might have on your cash flow. Where possible, try to agree payment dates a little before your regular outgoings, so as to ensure you’ve got the adequate cash in place to cover them.

Be prepared to punish the late payers

When drawing up your contract, ensure that you give yourself leeway to punish the late payers. Legislation has recently changed here, giving contractors more teeth to deal with unscrupulous clients, so be aware of your rights should worst come to worst.

Record, record and record again

It’s goes without without saying that keeping stringent records is at the crux of achieving any sort of financial well-being, and as such, it’ll help with your cash flow. Keeping a track of all your financial transactions you’ll be able to forecast better, and legislate for any lean spells

Pay suppliers promptly

Being good at meeting your outgoings is likely to be beneficial when meeting your outgoings. By keeping to suppliers payment terms, in turn you might find that they’re more willing to grant you some leeway, when times are really tough.

And finally, audit your tax efficiency

Interlinked to achieving a good cash flow position is being a tax efficient business, as this’ll help you to achieve peak profitability. As such, weighing up the benefits of going limited is something you should do continually, as alternating your business structure could make your cash flow position that little bit rosier.

 Mark James is a writer for online accountancy firm Crunch

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