There is an adage that ‘money is the key to anything if not everything' if this is the case, then the steady cash flow is the oil that keeps that engine running. Without cash flow, many individual businesses would fall to bankruptcy.
It lets you know your inflow & outflow. With cash flow, you can cut the weeds drying up your wallet. It is a vital step to your financial stability journey.
How do you manage cash flow is the real question. In this article, we will discuss 7 Tips on Managing Cash Flow. But firstly, let’s answer;
What is cash flow management?
Cash Flow is the changes a business incurs in terms of money at a given time. Cash Flow Management then is keeping track of those changes. By managing, you track how much money goes in and out of your business. Are you making profits or losses?
Cash flow management; tips
1. Regularly track your cash flow
One can do tracking on a weekly, bi-weekly, or monthly basis. Regardless of the frequency you choose, ensure you’re up to date with your cash flow. You may use a book of records or software that allows you to access it anywhere.
2. Cut on Cost
Overspending is one of the reasons most businesses lose money. Spending on things they do not need, such as subscriptions and services. Though minute, they eat up on your finances slowly. What you do not need, do without.
3. Clean up old stock
Suppose you have pieces of equipment you rarely use. Instead of them sitting around, consider re-selling them. It is an excellent way to get quick cash.
4. Lease on pieces of equipment
Do you have a seasonal business? Instead of buying the working pieces of equipment that will not be used later, lease them. This way, you get to use top quality products and not dig deeper into your pocket to acquire them. However, remember to account for the leasing fee in the records.
5. Keep your invoice close.
When a specific order or job is done, send an invoice to the clients. This is particularly handy as a future reference.
6. Ask for milestone payments and faster modes of payment.
In some business where quality is of the essence, owners may ask for milestone payment. It lets you have a solid footing with your client. However, it might not sit well with all clients.
Some modes of payment may take longer for funds to cash out. Have mobile payments, or others are fast to deliver.
7. Increase your business margins
You may do this by increasing your investment capital. Have more products and services to offer your clients. You grow your business while smiling on your way to the bank.
But suppose you’re running low on cash to pay your vendors and clear those bills. At such times, you need a financial friend that is reliable. This is where lenders such as siloans.com come into play.
However, not all lending sharks are credible; some may be more of a burden than relief. It is advisable to take caution when taking loans to ensure you do not take a lifetime repaying them. Always check on the customer reviews and ratings.
With cash flow management, you can predict your profits for the future. Cash flow management through invoicing, cut on cost, and leasing pieces of equipment lets you have financial stability. In the face of a disaster such as Covid-19, your financial state is secure. Friends such as Siloans also help you in such times when you need cash urgently.