Is your business cash flow regularly hitting rock bottom?
Do you have complete visilibity of your business cash flows?
Cash flow management is a key part of any business, which means ensuring that the business has more receivables in a particular period than its payables. This helps the business pay the vendors, purchase inventory, ensure survival and invest for growth.
However, many small and medium enterprises either lack or have a poor cash flow management system in place, leading to business failure.
Here are some of the easy steps businesses can take to improve their cash flow management process.
Monitor Your Cash Flow
To manage your cash flows effectively, the first step is to keep track of your cash. This involves closely monitoring every area of your business where money is involved and regularly monitoring your receivables to payables.
Once you get a proper idea of your business’ cash flows, you can then start planning on ways for improvement. If you find any issues like higher expenses, tackle them early on. BFM helps businesses get complete visibility of their cash flows and makes managing them easier.
Reduce or Delay Expenses
While bringing in more funds into your business is the key cash flow management strategy, reducing payables achieves similar results. You can fill in your vacancies with part-time workers, lease out unused equipment and look for more affordable vendors to cut costs.
If you have any vendor payments coming up, reach out and negotiate for an extension and delay them for as long as possible. This can boost your cash flow significantly.
Keep a Cash Reserve
Cash reserves are an emergency fund for your business to be set aside for events when your regular business funds are stretched tight.
Cash reserves help protect your business by offering funds when you face unexpected costs or start losing revenue. These ensure your business can keep things running without applying for a loan or increasing the credit card debt.
Set Invoice Terms & Reminders
It is particularly important to establish detailed payment terms when taking on a new client. Make sure to describe in detail the period of invoice payments, whether they are immediate or in 15-30 days.
Moreover, you should also send out periodic reminders to your clients when the invoice payment date approaches. You can also automate this process through business intelligence software like BFM.
Use a Financial Management Software
While cash flow management is an essential part of the business, it is not the only process you as an entrepreneur should focus on. A smart move is to take advantage of business intelligence platforms like ZikZuk’s Business Finance Manager (BFM).
BFM helps your business by integrating with your Tally account and giving detailed insights on business finances. It constantly monitors your cash flow and provides actionable insights to further improve it.
BFM helps you stay up-to-date on your business’ cash flows, gives clear information about the expenditure activities and helps forecast your cash flows for effective planning. To know more about BFM and its benefits for your business’s cash flow management, reach out to us today.