Getting on top of your cash flow is very important if you want to get a hold of your finances.
Here are 10 ways to manage cash flow:
1. Make sure that your bank is informed
Banks have capability to offer different business services such as credit or overdrafts, most especially when the businesses are just starting out. Your bank would certainly appreciate contacting them in case there is anything unexpected happening.
2. Train a reliable employee to regularly monitor your business’ cash flow
Small businesses can take advantage of monitoring the cash flow of their business by assigning a dedicated person who can track the flow of money. This is part of being clever in analysing the movement of your cash, thus getting on top of your game.
3. Focus on your cash flow, not just on profit
Some SMEs fall into the trap of failing to create a cash flow since day one. This happens despite having profit forecasts for years in the future. This can result in early failure of businesses. On the other hand, if your cash flow is right in order, your profit will also be in order.
4. Take advantage of technology to manage cash flow
Technology often makes it very easy to manage cash flow. It provides flexibility in terms of viewing accounts, thus removing worries regarding the need to backup all data. Everything can be done using a laptop or a gadget, keeping yourself up to date with your current status.
5. Enter a payment arrangement plan which minimises debtor days
Every business, regardless of size, experiences some kind of gap when it comes to payment and invoicing. This can be minimised by establishing direct debit as a norm for your business, especially in collecting receipts. In this way, your business can practically scale without the need to increase the required cost in collecting the debt while providing good cash inflow.
6. Make good use of fixed rate packages for payment
One way to ensure a good cash flow is by taking advantage of periodic payment packages. Retainer packages that are often billed in advance can provide an opportunity to being paid upfront instead of in arrears. This makes planning on business growth and spending easier.
7. Make payment strategies easier for your customers
Payment transactions should be made easy. Paying through cheque can result in further delays. Online payments can turn out to be a better option.
8. Given an invoice right away
After providing service, an invoice should be given right away to the client. By doing so, you can expect to get paid earlier.
9. Be clear on payment terms
By establishing a clear payment term, you know when you get paid, and how you can manage your cash flow.
10. Set targets
A good way to control cash flow is by preparing well and maintaining a good forecast. This allows for necessary attention while providing a satisfaction level that can beat problems, in the long run.
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, including managing cash flow -contact us today.