Having a positive cash flow for your company will certainly assure you of keeping the doors open and your employees gainfully employed. It’s imperative to stay on top of your finances at all times so that you know the amount of money that you have coming in and the expenditures that will drain your accounts if you haven’t planned carefully. Many businesses fail in the first year and the main reason is that the owner hasn’t managed the company’s cash flow properly. Let’s look at some tips for keeping your cash flow running smoothly through your company’s coffers.
The best way to control your cash flow is to have a forecast of your business finances for the next six months. You should have targets that you make during a quarter to ensure that the money you need to pay your vendors, rent, employees, and other costs is in your accounts and ready to be used. You can always adjust your projected cash flow amount if unexpected sales occur or a crisis impacts your business.
Make Payment Terms Clear
With your vendors you should know exactly what your payment terms are, when the payments are due, and what happens if you can’t make it on time. A good rule of thumb is to make all of your payments within thirty days of the due date to avoid fines and penalties and to maintain a good business reputation. In order to control your cash flow, you must be familiar with what is due and when.
Send Invoices Promptly
In order to receive money from your clients in a timely fashion, you must send invoices for your goods and services promptly. If you wait three weeks to send them an invoice, this extends the wait time for the payment that you need to pay your own bills. If you use email to send invoices you have an almost instant way of communicating with your customers; use follow-up methods to ascertain that they received their invoice if payment isn’t made by the due date.
Make Remittance Easy for Your Customers
Online payments will work the fastest for your business whereas a cheque will take days before it reaches your business account. Make the payment method as easy as possible for your customers and reward them for rapid attention to their bills. You should find what works best for them and you and make sure that they have the ability to pay the way that they prefer.
Focus on Cash Flow Instead of Profits
If you keep your focus on the cash flow for your company instead of the profits that you may be making, your company will have a greater chance for success. If you have positive cash flow, you’ll have profits; they each balance out the other. You should have a plan in place also that includes recruitment finance in case your cash flow suffers during any particular quarter. This gives you an alternative method of meeting your payroll and paying your other bills whilst your invoices are collected for you. By visiting http://www.cashsimply.co.uk/improved-cash-flow/ you can educate yourself on the process and include it in your tool chest of possible solutions.
With just a few simple tips, you can manage your cash flow successfully and be about the business of realising your dream.
Image courtesy of: FreeDigitalPhotos.net Stuart Miles