Cash is ultimately the king of business and without healthy cash management, businesses are destined to vanish eventually. Business cash flow management is a crucial component often considered as blood pumping in the heart of a business, without which a small or mid-sized business will eventually succumb. Managing a positive cash flow is imperative and that is where many companies fail to function as they tend to keep cash flow management at the bay. Here are seven tips on how to manage cash flow better:
In layman's terms, the break-even point is where the company has the same expenses as its revenue. Finding the break-even point of a business is a preparatory step towards achieving a positive cash flow.
One of the crucial steps to manage cash flow is to cut costs or corners where you can. It includes payroll, rent, utilities, subscriptions, and so on. You can renegotiate on leases and loans your business has borrowed as well as on rent and payroll if you can. Cutting corners should turn those figures in red to normal.
When transacting products and services with new clients, always work on the terms of filing invoices and payments. A better business cash flow management is when you have enough cash to accommodate expenses before you hit another milestone to trigger payments.
To accomplish a healthy business cash flow management, you need to do all there is to stay afloat with reserves of cash in hand. This includes encouraging clients to pay upfront or pay early. Offering incentives such as discounts and special deals would lure the clients to pay early. In the meantime, you’ll have a healthy amount of cash coming in to manage everyday expenses before you are paid in full with profit.
You don’t want to manage cash flow and other aspects of your business together as there is always a probability that you will make mistakes. Since cash flow deals with the finances of your business, it has top priority and for that, you can hire an employee or an accountant to manage it. You can set the frequency of the cash flow statements so that you are always updated with the latest figures, giving you a glimpse if you are in loss, profit, or have reached a break-even point during any particular period.
Instead of recording everything on spreadsheets as businesses did for a long time, there are a bunch of specialized business cash flow management software available out there. Although these software won’t be a piece of cake for someone who is using them for the first time, they make sure you have all the data you need with easy access on the cloud and a ton of plugins and add-ons that you can use to escalate accountability.
If you are a small business owner who can’t afford an accountant or set aside an employee especially for this job, learning everything about business cash flow management is the way to go.
MCC Coaching is a haven for business owners who wish to learn more about how to run a business, manage cash flow better, and more. Other areas where MCC Coaching provides group and business coaching are change management, black belt six sigma, PMP designation, NLP, and more. Contact them for all your business needs.