How to Manage your Cash Flow
Cash flow issues can lead your business to fail.
Let me say that again. Cash flow issues can lead your business to fail
If you cannot afford to pay your bills and suppliers, then it is going to be hard for you to keep your business’s doors open. Luckily, with proper cash flow management, you will give your small business a good chance for survival.
Improving your cash flow improves your chances for success. Be mindful of both sides of the cash flow equation: your customers and your suppliers. You will find your best opportunities for cash flow improvement in those areas.
For your business to stay afloat, you always want your customers to pay on time. What good is having a business without cash flowing into that business? When customers use credit, they are trying to delaying paying for a purchase. It is up to you as the small business owner to find ways to encourage them to pay you as soon as possible. Two ways to accomplish this is by providing discounts for purchases paid for promptly and by selling older merchandise at discounted prices, if you are a retailer.
You can also factor some of the older debt that you may have deemed uncollectible. Unfortunately, this may cost you money since factoring companies tend to by old accounts at a lower amount than what was originally due. However, it is about getting cash flowing in the door and getting those uncollectible accounts off the books. Check out Fundbox if you are looking for factoring assistance.
To your suppliers, you are the customer, so it is understandable that you want to pay your debt to them as close to the due date as possible. By doing this, you ensure your business has cash on hand and that said cash earns interest. Managing your cash flow with your suppliers requires you to review your financial obligations closely to find ways to reduce costs.
Negotiate with suppliers, shop around, and take advantage of the discounts they offer to accomplish this savings. The suppliers want your business, so there is nothing wrong with seeking terms that can be beneficial to both parties
While this is not an all-encompassing list of cash flow management strategies, using the strategies mentioned can help improve your business’s cash flow. Equitable Bookkeeping can help with this. We will help you see where you have been and determine where you are presently. With this information, Equitable Bookkeeping can help you decide what direction you would like your business to go. Give us a call today to schedule a consultation.