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6 Tips To Improve Cash Flow

Effective cash flow management is key in ensuring that you can support your business operations.

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Cash flow is crucial in ensuring a business’s continuous operations and growth. We all know what cash flow is, the money that flows in and out of the company. But do you know if your cash flow is healthy? 

Cash flow is a good indicator of business health. To ensure your business can support its operations, it goes without saying that you must maintain a positive cash flow; that is, your inflows must be more significant than your outflows. 

But with the many internal and external challenges every business faces, keeping up with the expenses can be challenging. We’ve rounded up six ways to help you improve your cash flow.

 

Keep your books in order.

This is an obvious point, but many small operators do not focus on enough. This is probably the first thing you must master to manage your cash flow effectively. Keeping your books in order helps you get a better look at the cash that goes in and out of your business. This way, you can better understand your income and expenses to help you make sound business decisions and control your spending habits.

 

Create a cash flow forecast.

It would be beneficial to create a cash flow forecast. You can list your projected revenue and expenses for the next 12 months. This helps you better manage your spending and prepare for any seasonal highs and lows in your business.

 

Reduce your overheads

Reducing expenses is an excellent way to ensure stable cash flow. Talk to your suppliers and see if you can negotiate for lower prices or better deals on your purchases. Perhaps they could also offer you a discount for early payments. 

If you plan on purchasing new equipment and assets for your business, you may consider finance facilities. This way, you can improve your work capacity without tying up your working capital to a depreciating asset.

How To Improve Your Business Cash Flow​

Healthy account management

Ensure your clients pay on time by setting clear payment terms and sending out invoices promptly. Streamlining your payment process and offering your clients different payment options like PayPal or Stripe for online payments or the choice to accept credit or debit card payments for online and physical stores is also helpful. So it’s easier to settle their charges. You may also provide a small discount for early compensation to motivate them to pay early.

 

Increase your income

Ensure your pricing is proper. Consider all the costs of selling your product and service to ensure you get the right price to maximise your profits. You may also consider bundling your products to cross-sell or upsell. Of course, don’t forget that improving customer service and satisfaction is vital in maintaining your income. This helps build strong customer loyalty and allows your business to thrive in the long run.

 

Set aside a cash reserve.

Setting aside emergency funds to ensure your business can continue operations even during unforeseen crises is good practice. Keep some money that can cover your expenses for about three to six months to allow money to flow into your business as you recover from these crises.

Effective cash flow management is vital in ensuring that you can support your business operations and help prevent drowning in debts when unforeseen crises arise. If you need help managing your cash flow, our specialist advisors and accountants are here to assist.

 

Book a 30-minute complimentary consultation with us today.

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