As with any business, successfully managing your cash flow will set you on the path to owning a financially sound company. Find out how you can effectively manage your cash flow with our easy guide.
The aim of any company, be it small, medium or large, is to maintain a healthy business ledger; or in terms, you may be more familiar with; in the black, financially sound, money in the bank, not in the red.
To have your business find substantial financial success, you must first start with good cash flow management.
What is cash flow?
Cash flow refers to the incomings and outgoings of money, relating to your business. Cash flow is usually recorded monthly although cashflow can be monitored on a daily, weekly, or even quarterly basis.
How well managed the business cash flow is, will play a significant part in the success of any business. But how can you ensure that you are making good choices when it comes to good cash flow?
By following these easy tips, you can learn how to manage your cash flow effectively and ensure you and your business financial success.
Consistency is key:
Make sure to consistently maintain your cash flow records, pick a time scale that is achievable for you and stick to it. Cash flow records that are weekly, then monthly, then bi-weekly won’t be able to give you an accurate or easy account of your incoming and outgoing finances. Most businesses maintain a month by month cash flow for a reason.
Invoice on time:
If a significant source of incoming cash to your business is via invoicing, then make sure to not only accurately invoice any clients but also to be punctual. You know you must send the invoice, your clients are expecting it, there is nothing to be gained from sending out an overdue invoice.
Set up a cash flow forecast:
Like looking at the upcoming weather before a trip, it is also beneficial to look forward into your finances using a well-planned cash flow forecast. This can help you gain insights into any problems that may arise further into the financial year, giving you time to stop them before they begin.
Take online payments:
Sometimes one of the easiest ways to take control of your cash is to accept a single type of payment, and if you were to do this, then you may find online payments the better option.
Try to limit the number of checks issued to you as payment, regardless of whether you chose to make online payments your primary payment option or not, as a check will result in payment delays to your business income.
Invest in accounting software:
Excellent online accounting software will be easy to use and give you a more unobstructed view of the current state of your business accounts. The software will also be able to save you time, as many accounting packages store the added data or information in a cloud storage system, eliminating the need to be regularly backing up your data.
Remember, maintaining good cash flow is like keeping a good garden, it takes time and effort, but the rewards are worth it.