Cash flow is integral to keep a business running and is something that you cannot afford to be lax about. When it comes to small and mid-size businesses, especially, it is essential to keep a close watch on the money coming in, the amount being spent, and also any shortfalls that you are encountering. Maintaining a fine balance between these three elements can boost the health of your business and steer it towards the success you seek. Here are some tips on how to manage cash flow for your small business venture:
Update Your Bookkeeping Process
Make use of accounting software to keep track of all the cash related to your business. QuickBooks Online is one such assistant and it can help you track your accounts and compile reports amongst others. Also, this can come in handy even when you are not at your workplace since all your information is available in cloud storage and you can access it anytime.
Be Diligent About Invoicing
Do not delay when it comes to invoicing clients for work done or services rendered. Ensure that your invoices are sent to the appropriate department or concerned authority directly to prevent them from being shunted from person to person or office to office. Try to keep your invoices simple and straightforward with the relevant details like the amount, due date, and payment details appropriately highlighted.
Work on Putting Together a Cash Reserve
Despite all your efforts, it is possible that you will run into a cash flow problem sooner than later as it is with most businesses. Having access to some emergency cash can prove helpful in such a scenario. You could do this by selling off any machinery or equipment that is of no use to your business any more or securing a business line of credit from a financing institution or lender. Business credit cards can also prove useful for this purpose.
Turn Tech Savvy
Switch over to mobile payment solutions that work through apps on tablets and smartphones. If you are wondering how to manage cash flow this way, there is a simple explanation. By accepting debit and credit card payments you can get paid instantly for your products and services.
Offer Pricing Discounts
You can give your customers discounts for choosing to pay early. While this might have an impact on profits, it might be better than the alternative which is running short of cash. Do the calculations to arrive at an attractive discount without cutting too much into your profit margin.
Negotiate Payment Terms
When there are long-term contracts or large orders involved, it is best to ask for a deposit upfront. This will bring in the influx of cash necessary to pay employees and source any materials essential for the project. Similarly, try to postpone payments to vendors as far as possible without incurring any late fees unless there is some worthy incentive for early payments.
Ensuring a steady cash flow will help your business survive even during tough times. So, knowing how to manage cash flow carefully on a month-to-month basis to remedy your weaknesses and boost your strengths. This will help you hone your skills in cash flow projections that can be of help in expanding your business going forward.