If you’re a business owner, you’ll know how important it is for your organisation to maintain healthy cash flow. Unfortunately, once in a while, with so many responsibilities on your shoulders and tasks to get done, we neglect the cash flow and end up having a hard time controlling it. Thankfully, suffering cash flow is a temporary problem and one that can be rectified by taking a few crucial steps. In this article, we look at how you as a business owner can regain control over your cash flow and learn to be more diligent about monitoring your business finances. Read on to find out more!
1. Enlist The Help Of Software
One of the best ways for any business owner to manage finances is to enlist the help of an accounting program. With the numerous tasks that need to be completed on a daily basis, the last thing on anyone’s mind is sitting down and manually calculating or collating the business accounts. This is where accounting programmes and software come into play. Leaving the hard work to your software not only saves you time but gives you error-free reporting and can assist you in managing your cash flow a lot more effectively. Accounting programs can keep track of your spending, thus allowing you to adjust your expenditure in a bid to bring your cash flow to a healthier level. The benefit of a software solution is that it is constantly running in the background, so your data is always kept accurate and up to date.
2. Simply Cut Costs
One of the easiest ways to regain control over your cash flow is to simply cut costs. It doesn’t get any easier than that. Take a look at your business purchases and expenditure – are they too extravagant? Are you purchasing items or services that you don’t necessarily need? It is important that you focus on regularly, monthly and annual expenses when trying to figure out your business expenditure. Is it possible for you to go green and cut back on utilities? Perhaps even purchase refurbished computers instead of new ones? Are you spending money on subscriptions that you no longer need? Ask yourself these questions and then single out expenditures that are unnecessary for your business – this one of the best ways for you to easily regain control over your cash flow whilst at the same time educate yourself on better ways of utilising your money.
3. Get A Little Firmer With Your Customers
A big reason as to why many companies suffer in the cash flow department is that they are simply too lenient with customers. It is important that you keep a close eye on accounts receivable at all times. Are there certain clients or customers who are constantly late with their payments? If so, you may benefit from being a little firmer with them and letting them know that it is imperative they make payments on time. There’s a fine line between being a pushover and a tyrant, but find a middle ground that is fair for all parties concerned. Don’t be afraid to take formal action if necessary – the financial health of your business counts on it. Acting sooner rather than later on accounts receivable in order to take control of your business cash flow.
4. Find Ways Of Increasing Revenues
One of the best ways to improve your cash flow is simply to start earning more revenue. We know this is easier said than done, but there is no harm in taking some time to pinpoint any possible holes in your sales process. Focus on ways in which you can further market your products. These methods don’t even have to cost you money – consider marketing your services on platforms such as Facebook and Instagram which essentially give you free promotion. Sending out newsletters is also another great way of trying to increase sales. As your revenue increases, so does the amount of money you’ll have to set aside for your cash flow. This may not happen overnight, but is one of the best ways to maintain a healthy cash flow long term.
5. Build A Cash Reserve
Last but certainly not least, building a cash reserve has probably got to take the cake when it comes to improving cash flow. A cash reserve provides your business with a cushion when times are rough or unexpected events occur. Whilst it’s not always possible to build a massive cash reserve, we always recommend businesses keep a fair amount of money aside in this reserve and constantly try to invest into it when possible. Cash reserves also allow you the financial freedom to invest in resources instantly, thus allowing you to take advantage of seasonal or bulk discounts for your business.
We hope that this article has equipped you with some simple methods of regaining control over your cash flow. With a little planning and frugality, you’ll be on top of your cash flow game in no time!