Managing cash flow is not a really fun thing to do but it is a crucial part of running your business. At the end of the day, you need cash. Did you know that 82% of businesses are forced to shut down their operations due to bad cash management? Save your business from this fate by managing your cash flow better.
Here are a few tips to maintaining a good cash flow.
Pay up front
Ask customers to pay cash or credit card. They should also pay on delivery or if you are using an e-commerce site, they should pay via credit card or PayPal. By placing these rules, you avoid payment delays and even uncertainties.
For big purchases, you can offer discounts if they will pay cash up front. This will help you predict your cash flow for the month more accurately.
Send invoices in advance, around 10-15 days before the payment due date. Give your customers enough notice.
Track all outstanding invoices and use a collection service if you need to.
Not only should you keep track of your incoming cash but also of your outgoing cash. Review your bills. Check for hidden charges. One example is the telephone bill. Did you know that most companies only use around 20% of their business telephone system’s features? If you are one of those companies, it’s time to review your telephone system features. Give your provider a call and tell them what features you want to be removed from your plan. You will be glad to see a lower bill next month. There are also many introductory offers for small business.
You need to have a clear budget. You should also record all expenses and incoming cash. You need to be accountable for all financial transactions in your company. Most start up entrepreneurs forget this step and they only realize it when they are in deep trouble. Start by diligently recording spending so that you will not go over budget.
There are many investments that have ROIs that are hard to measure. For example, events can cost a lot of money but you really can’t determine their exact worth until it’s over. If you have been estimating your ROI, this is poor practice. Use tools to measure your money’s worth more accurately.
Most new entrepreneurs overlook proper inventory management. It is important to have sufficient stocks but more often than not, start-ups overstock. You can use software to keep track of your stocks. You also need to have a Plan B in case you don’t sell all your stocks. A great way to keep stocks fresh is to hold regular sales. At the end of every quarter, hold a clearance sale to get rid of all your idle stocks.
This is hard work for a start-up entrepreneur so if you want to be able to have someone do this for you, manage your cash flow better now. Avoid drowning in debt like other start-up business owners. Stop wasting your money and stop worrying about the future with good cash flow management.