In order for your business to succeed and grow, you need predictable and reliable cash flow. You can’t survive day-to-day transactions without cash, there’s no denying it. If you don’t understand the importance of cash flow in your business then you’re lost.
Here are some ways to manage and improve your cash flow:
1. Be Prepared
Many entrepreneurs fail to properly estimate their cash needs during the early years of a business. Even established businesses may have challenging times. Make sure you have enough cash available or an open line of credit available just in case of emergency.
2. Monitor Receivables
There are many tools that can help you send invoices, monitor and collect payment for products or services (e.g. HoneyBook, Quickbooks). Use any of these tools to improve poor tracking of receivables by your accounting team.
3. Manage Payables
Make sure your team has a system to control payables in an ethical manner. Don’t pay them before they are due, negotiate terms with suppliers, and consider getting outside help to improve inventory if necessary.
4. Educate your team
Train every member of the team that has an impact on cash flow about how it works, what actions can improve it, and why cash flow is so important. Establish a standard procedure for managing various aspects of the business that affect cash flow. If some team members do not grasp the concept after training, hire those who do. Hire someone who understands how the system works, especially the tools used in your business.
Even if you have a profitable business, if you suffer poor cash flow for too long, your business may close down due to cash shortage. Manage cash and ensure that your business is successful in the long run.
How are you managing your cashflow? Leave a comment below!
Team OM @ Outsource Mondays