Cash is king when it comes to growing a business. Businesses often come into problems when they don’t know how to manage their cash flow efficiently. Regardless of whether there is negative cash flow or positive cash flow, small business owners will find themselves struggling to expand, meet operational goals, or access working capital if cash flow is not managed correctly. Cash flow issues could arise due to seasonal fluctuations or keeping up with demand, but as long as a business stays on top of it and finds a financial solution to help them through, it doesn’t have to be a big problem. Below are some tips to help you manage your business cash flow effectively.
How to improve your cash flow
Keep running measurements of your cash flow
Keep a running tab of your cash flow statements to project your business’s outcome. Both long term and short term projections are useful when measuring cash. Prepare projections yearly, monthly, or even weekly when needed. Accurately projecting your cash flow will help you analyze your needs and prepare you for cash flow shortages before they hit.
A cash flow plan is a “guesstimate” on your customer’s payments, your vendor’s patience, and how to handle your upcoming business expenses. It’s important to note that the amount of cash won’t always come in at the same rate when preparing your projections, and seasonal fluctuations need to be accounted for.
Manage your accounts receivables
Unfortunately, you don’t get paid as soon as you make a sale, which causes some cash flow issues. One way to improve these issues is by managing your receivables. To turn supplies into products, products, or services into receivables, and receivables into cash, you have to manage them accordingly. Some ways to do this are by: