5 Handy Tips for Managing Your Cash Flow
Cash flow is a drag for a great deal of businesses. Start-ups in particular often find themselves struggling with this as they focus on getting into the swing of things. A vital step towards business success is to develop a strategic cash flow management process. Here are 5 useful tips to help you do this.
1. Learn from the Past
Looking back is extremely helpful when it comes to moving forward. Identify any consistent patterns in your cash flow that can help you forecast your future revenue spikes and falls, then plan your finances accordingly.
2. Evaluate Your Processes
Regularly scrutinise the systems you use for invoicing, managing financial data, tracking receivables and paying your suppliers. If a problem in your processes is blocking your cash flow, the only way to discover it is through analysis.
3. Time Payments Strategically
Strive to pay your invoices as late as possible while simultaneously getting your own receivables paid sooner. Strong cash flow only comes to those who are proactive and clever with their money management. Never hesitate to follow up your payments and debts earlier rather than later.
4. Keep Your Relationship with Your Bank Healthy
While your suppliers are important to your business, your bank is usually your most crucial creditor. Building a strong rapport with your bank will put you in a good position to make the most out of the resources they can provide for your company. For example, having a detailed cash flow management plan to show your bank can encourage them to boost your overdraft amount or grant an extended payment.
5. Help Customers Pay You Quickly
If paying for your goods or services is a tricky or time-consuming process, you’re going to lose customers quickly. Needless to say, less customers will also have a negative impact on your cash flow. Swap cheques for EFTPOS and welcome credit cards as much as you possibly can.
It’s no exaggeration to say that cash flow management is absolutely vital to business success. For tailored assistance with managing your cash flow, please get in touch with the CFO Centre team today.