Cash flow has the same value in your business as blood in your body. If it stops moving, the ultimate failure and total collapse of the business or company will be the result. And this will not be something that any businessman wants. So, you need to appropriately manage cash flow if you want your business to succeed.
Cash flow is actually the total amount of money that comes into your business and moves out of it. Positive cash flow is indispensable for the survival of any business or company.
A positive cash flow is when the amount entering your business is greater than the amount going out of it. If you manage cash flow to do so, your business will never collapse as you are earning at least some money on a regular basis. However, doing so is not an easy task and you can estimate it from the fact that more than 80 percent of businesses in the world that collapse due to financial reasons involve poor cash flow in the whole process.
There are many ways you can follow to avoid landing in such circumstances. For example, the use of an expense tracking system can help you track accurate and timely records of your cash
With that said, the following are the top 5 ways that could help you in this regard.
Check Out the Profits
Profit is the driving force behind any business. If a business is earning you a handsome amount regularly then it means that you are going on the right path. However, only profit can’t decide the cash flow as you also have to estimate the amount going out of your business. However, calculating the profit you are earning is the basic step of maintaining cash flow.
For that purpose, first of all, you have to make a list of services and products that you are providing to the people. Then estimate the amount that you spent on each of them along with the amount that they give you in return. This will help you to sort out which service or product of your company is more profitable and you can also stop providing the services which are earning nothing for you, or develop some strategies to make them profitable as well.
Cash Flow Projection
You have to make a cash flow projection for the upcoming year. Use an excel sheet or accounting software and design the expected amount of money going out of your business and what you are going to earn in response as well. This will help you to look ahead and work on the weaker points before time. Keep on checking whether the estimation made by you is going in the right direction or not and you can do so weakly or fortnightly.
Minimize the Equipment’s Number
This might seem to be different from other ways and many of you might be thinking about how this could be helpful in cash flow. However, the answer is clear as more equipment will require more care, and power to run them. If you think your company can go well without some of the equipment, then you must sell them and earn some quick money.
Use Advanced Payment Methods
Using advanced payment methods such as mobile accounts, etc. will help you to transfer money easily. Moreover, it will also help you to get money from the clients fast, as they don’t have to visit banks or your company for payment. They can do so by a single tap and this will be effective in the cash flow process.
Also, whenever you make a payment, make sure to keep a record of it. The use of efficient expense billing software, i.e. BQE Core can help in this regard.
Deal With Crunches
Certain ups and downs are part of the business and certain declines in cash inflow will not be a big deal if you know the proper way to deal with it. You can raise it by adding money and get it via your bank, some investor, your savings, or offering some discount. Your search for better cash flow management will end there if you keep on following these ways. Make sure to not lose temper in case of any crunch and try to develop better and stronger strategies.
