In any kind of business, managing cash flow is one of the many secrets to success. It is important to maintain a superb cash flow guide that can track the coming in and going out of money for the business to succeed. How do you do that with all the other aspects of business that needed to be watched over?
Here are 5 tips on how to maintain and manage an excellent business cash flow:
1. Set your goals
The first thing to do is to set your goals and targets. It is always great to start with a clean sheet. Identify your cash flow requirements and start preparing and maintaining a forecast for your cash flow. In this way, you will be able to control the flow of cash for your business in half a year or the whole year round. Update your target weekly.
2. Identify and decide on clear payment terms
It is always advised to establish outright clear payment terms. You have to know the terms of payment on doing a project—from the amount to the dates. This will help you know the days you are going to be paid or when the payment will be overdue. For some businesses working on the government, for instance, an Act requires payment within 30 days. Your employees need to be paid as well as your suppliers within that time span.
3. Identify things that influence and address them quickly
To be able to conceptualise or scheme an excellent cash flow guide, you must identify some of the factors that influence managing cash flow. One of which is the invoice. You have to do the invoice quickly after the project is completed .Emailing the invoice is also a good idea as it is faster, and you can keep record of the said invoice as well.
Rates and payment from customers also influence the flow of cash to your business. For rates, it is good if you can have payment packages available with fixed rates so it will be easy for you to predict your income in a month or so. For payments, it is always good to get paid using online options than cheques. Cheques may cause delays before getting cashed or before arriving at your bank. For your debtors, always make the payment arrangement to avoid overdue and help you stick with your cash flow guide.
4. Use technology
There are a lot of cloud-based accounting and other software today that makes managing cash flow easier for you. You can use them to track business cash flow to save time and effort. This will allow you to work and give more focus on other aspects of your business.
5. Train employees and established relationship with your bank
Training employees to monitor cash flow is very efficient and can contribute to making a solid cash flow guide. Small business especially should invest in dedicated, trusted and loyal employees to monitor the coming in and the going out of money in the business.
Establishing a good relationship with your bank and keeping them informed on unexpected business cash flows will not only prevent them from getting shocked but also help them identify some useful services you can avail to maintain stable and smooth flow of cash for your business.
Keep these five tips in mind when managing cash flow. Create a well-established cash flow guide to manage your business cash flow well. You may also seek the advice of an excellent business improvement specialist to help you regarding these matters.
About the Author:
Scott Whitehead is a Business Improvement Specialist with Pro-actions, serving Braintree and the surrounding areas. For a free chat about what Scott can do for you and your business contact us today.