Healthy cash flow simply means good and profitable business. It reduces stress for business owners because it means building a successful company. As the business grows, there will be a sufficient cash to support the other relevant aspects of a business. It includes marketing, customer service and inventory needs. Therefore, managing the cash flow will be the key to a sustainable growth of the business. Here are four cash flow tips on how to make your cash flow run smoothly.
Tip # 1: Monitor your cash flow REGULARLY
This is the first step towards achieving a smooth cash flow. It is important to record every expense and income the business makes to make sure that everything is documented. As of today, there are a lot of online accounting software such as Quickbooks Online that makes it simple to reconcile your accounts and generate reports. From the traditional way of bookkeeping, this method can make the job faster than usual. It is also a safe place to store this confidential information. Also, storing this information in the cloud makes it accessible anywhere you are. You can check your cash flow regularly even if you’re not in your store.
Tip # 2: Maximise Inflow and Minimise Outflow
You should go back to basics - evaluate your business on a regular basis to make sure that you are optimising the pricing while controlling costs. It is important to protect your cash flow because critical problems can arise if it is not properly regulated. Outflows can be minimised by outsourcing certain positions, utilising technology for data storage rather than the filing method to decrease overhead costs and repairing rather than replacing equipment. Focus only on recurring expenses and evaluate whether it can be reduced.
Tip # 3: Use Debt to Grow
Borrowing, in general, may be a negative word for us but in business, it is considered normal. The reason why businesses borrow is that they are taking advantage of the opportunity to grow their business. It is important to bear in mind that debt can lead to positive outcomes only when used properly. Having debt is a risk for the business, therefore it is important to be diligent in paying them and maintain a good credit record. Remember, if your plan goes wrong, you will need to be prepared to compensate. That is why it is important to have accurate information with regards to the cash flow of the business to formulate the right decision for the business.
Tip # 4: Stay on top of invoicing
Invoicing can be a simple task but holds a big weight to the success of the business. Therefore, create the habit of sending the invoices immediately after the work is completed or products are delivered. This is also to avoid having piles of invoices to send which can cause problems in the long run. Design your invoices in a way that is easily understood and straightforward, highlighting all the important information needed. It is also a good idea to email the invoices instead of mailing them to speed things up.
A bookkeeper can assist you in keeping a smooth cash flow. Visit www.eclataccountancy.co.uk to know more.