David Wilson
by on October 18, 2020
When it comes to managing the pulse of your business, keeping track of your cash flow is critical. If your business is thriving, this can help you identify new sources of business relationships and growth. On the other hand, if your business is struggling, tracking your company’s cash flow and identifying problem areas can help you manage capital well. Not being on top of your cash flow can even lead your business into bankruptcy. Your cash flows need to be reliable, steady, and solid enough to help not just sustain your business but also grow. If managing your business’s cash flow is turning out to be a struggle, here are simple tips to help you along the way. Pay attention to your equipment and other assets Every business has at least some assets they require to make their business operational. A baking company might have loads of cooking equipment, whereas a manufacturing company might have numerous containers, vessels and more. However, it’s not necessary that your business might be using all of these types of equipment and assets. Identify which assets or inventory items you can eliminate. Sell them to other businesses or vendors to generate some extra cash. We also recommend leasing equipment or other equipment such as cars and trucks. This way, you won’t tie up a huge amount of cash in certain assets. Plus, you can get the latest equipment by simply swapping the item for a newer model. Since you will lease the item and not buy it, it wouldn’t cause a big dent in your cash flows. Spread out your business payments If you make payments on the last date they are due, the money stays in your business account longer. This helps you gain interest on this amount of money. Thus, instead of paying all your business expenses in one go, spread them out according to the last date that they are due. To avoid forgetting about the due date, we recommend using a digital banking app to automate all recurring payments. This flexibility can also be utilised for business insurance payments. Do remember that you must not cross the due date, or else you’ll end up paying more money than you were looking to save. Focus on improving your accounts receivable An excellent way of improving your cash flow is by focusing on accounts receivable. Are there several payments you are waiting for? Have you suffered issues in the past due to delayed payments? You might want to pay extra attention to this matter and work on improving your accounts receivable. The key here is to stay on top of invoicing and speed up your payments. Offer your customers multiple payment options. It’s also a good idea to offer a tiny discount if the customer chooses to pay via an online method. This would encourage them to always pay online rather than opt for cash-on-delivery. This enables you to get payments faster and prevents any pending payments from stacking up. Invest in a sound business insurance policy One of the biggest hits your business’s cash flow can take is any unforeseen payments. These payments include damages you need to pay to a customer if they file a suit against you, theft or damage to equipment, inventory and other assets, or financial losses due to any other interruptions to the business. To prevent paying for these damages directly from your cash flows, secure your business with a Business Insurance policy. This insurance cover helps you take care of any such unforeseen payments easily without having to throw a wrench in your ongoing cash flows. Incentivise high-value customers If you have customers who regularly place large orders, ask them to make a part of the payment in advance. Doing so helps you get some extra money in your cash flow before the order is delivered, and you can then earn interest on this extra cash. You can do the same if you have high-value customers who you know are going to order all-year-round from you. If you have a long-standing and trusted relationship with them, encourage them to make the entire payment lump sum in one go. Since they might be hesitant to do this, offer them incentives. A few extra samples or a discount for the first two or three months can be excellent options in this regard. Read Here: md-100 study guide Conclusion Businesses can be tough to handle at times. Without steady cash flow, your revenue and profits would be purposeless. There won’t be any significance in making large profits when your cash flowing out is significantly higher than the cashing flowing in. However, utilising simple cash flow tips can enable you to stop stressing about the accounts of your business and focus on other areas. Some of these areas include marketing, customer delight and growing your business. By preparing yourself to be financially strong, you enable your business to grow with the utmost confidence, stability and reliability. Read more interesting stories from The Right News Network.
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