Tips and Tricks all Business Owners should know about Improving Cash Flow
Getting as much revenue does not necessarily mean enough cash flow. Often, entrepreneurs are caught up in the business of selling products or services, that cash flow management becomes overlooked. With a good cash flow management system, cash receivables should be pursued within the shortest time while slowing down payables without compromising of the suppliers’ relationship.
• Perform a financial forecastA good analysis of where your cash flow is currently at and future projections should be your first step. In most cases, business owners are unprepared for costs associated with the business’ growth. Growth in sales translates to more employees and increase in stocks. Begin with the forecasting of weekly cash flow projections, from which you can identify where surges might be expected due to several payments being made at once. This will help you roll out a yearly forecast.
• Ensure payment disciplineA good collection system whose aim is to shorten the period for receivables needs to be put in place. Encourage full payment after the credit period lapses. The aim is to not use the cash until you have it in your hand to avoid credit. As well, try to negotiate for a credit term of more than 30 days with your suppliers. This gives you sufficient time to supply the order or service, bill the client and receive payment to enable you to pay the supplier.
• Minimize drawing money out of business for personal useKeep in mind that every penny drawn from the business reduces the cash that you would have used to grow your business. Consider attending financial management workshop to enhance your financial skills. Seeking help from a professional financial advisor is also recommended.
Learn more about how your cash flow can be increased by visiting The Financial Marketing Group.