Managing your cash flow is crucial for business longevity. Cash flow is what determines whether your business will thrive or not. Despite its importance, many business owners are yet to come up with ways to manage cash flow and ensure business continuity. That makes it hard for them to initiate new orders, reimburse loans, and pay suppliers on time. With such issues, it becomes hard for the company to sustain itself and remain profitable.
According to research, 82% of businesses fail due to cash flow mismanagement. That shows how serious the topic in discussion is to any small, medium, or large business. However, it does not mean that keeping money flowing smoothly is impossible. With the right strategies and reliable workforce, you will find cash flow management to be effortless. Here are some of the best ways to ensure the smooth flow of cash in a business.
Track Receivables
Sometimes you need to be smart when managing cash flow in your business. The last thing you want is experiencing negative cash flow because you don’t know any cash management strategies. For more useful cash flow management ideas from Westpac, click here. The first thing you should consider is to motivate loyal clients by rewarding them occasionally. Do so by giving discounts to customers who pay on time. You should also take off some cash from clients who have late fees so that they can clear their payments on time. Even though you may end up making a loss, it will enable you to get rid of old inventories. That is how you give your business a fresh start. It is also how you entice clients to pay on time and clear any remaining debts.
Build a Cash Flow Forecast
The future of a business is usually uncertain. Anything can happen at any time and ruin your plans, however, that should not keep you from having a working strategy. Doing so is the only way to stay ahead of the impending disaster. With that in mind, build a cash flow forecast. Make sure it has all the information, as it should comprise of cash outflow and inflow. Take your time to compare the actual figures with the predicted ones to come up with a better forecast. Use every forecast tool and template at your disposal. Include graphs and pie charts if you can and ensure that you cover every sector in the business. With such a detailed forecast, you can adequately budget for the month and make better predictions.
Efficiency
Efficiency does not just involve the productivity and harmonious working of employees. It also involves transforming your working space to increase cash flow. Try and create an environmentally friendly culture, with less electricity and waste. You can start by decluttering the offices and rearranging them in a simple and unique way. Sell any outdated and unused equipment to provide enough space and bring in cash. Save money by comparing pricing on cars for your business. You should also order in bulk for greater discounts, which will make you reduce cash outflow and increase inflow. With efficiency, you may increase cash flow by a significant margin, and that can help make your business profitable.
Make it Easy to Pay
Sometimes the only thing that usually stands between your customer and early payment is the payment methods that you are using. You should make sure that you have a variety of methods that they can use. Don’t rely only on debit and credit cards. You can also include e-wallets like PayPal so that you can receive cash from anywhere and in any currency. These methods will make it convenient for customers to make payments on time and without delay. Consider other methods like cheque payments, Neteller, MasterCard, and Visa, if possible. It is the only way to keep clients from making payment excuses. With these methods, you will quickly increase cash flow since you can also use them to pay for expenses.
Carry Out Reference Checks
Having a few good and reliable clients is better than having many clients who cannot make their payments on time. So before you take on any particular client, consider carrying out reference checks. Find out more about the client, including his or her track record in terms of payment. You can easily get such information from competitors and other businesses. Once it is clear that they make their payments on time, go ahead, and start working with them. It may take you a lot of energy to gather the information, but once you do, it will prove worth your while. That’s how you end up having an incredible cash flow, which will ensure business success and profitability.
Each of the cash flow management ideas mentioned above works within many types of businesses. All you have to do is initiate the methods and see money flow harmoniously. With the right cash flow management strategies, you can experience business success.
