Do You Have A Handle On Your Financial Cash Flow?
Yes, do you have a handle on your financial cash flow when it comes to your business? This is a common question most business owners ask themselves almost every day as they do things to improve their business – is it necessary, can I afford to implement this or that? And lots more questions.
In this contributed article, we will look at a few ways to do some of the more necessary things for the business when it comes to taking care of the financial cash flow issue.
Could You Get A Better Handle On Your Cash Flow In Your Business?
When it comes to your business, cash flow is something that is massively important to your business. However, as things move forward with your business, the plates keep spinning and in theory, you may lose sight of the important aspects and the things that need to be kept abreast of.
The accounting side of things is definitely one thing you need to keep an eye on, so how can you manage the cash flow of your business better? How can you keep things in the black rather than the red? Here are some of the best ways to do it.
Get Paid When You Invoice
When you send out an invoice, many will offer a thirty-day window for payment, and most of the time this is just a generic way of doing things. But, this means that although you know the money is coming to you, the chances are you need to wait before it lands in your bank account.
The same is said on the reverse side of things, why should you pay for something now when you can keep the money in your account for as long as possible? Exactly my point. But thanks to things like Debt factoring, also known as invoice or accounts receivable factoring, it means that you can actually give the invoices out to be paid for, you have the money, someone else waits for the payment.
It is a great way to ensure that you keep the cash flow levels where they should be.
Paying Out Your Invoices
As mentioned previously, as you get the benefit of a thirty-day window for payment when things are invoiced through the trade it is important for you to take advantage of this. Keeping the money in your business bank account as long as possible helps your accounts to look healthy, and keeps you on top of things such as cash flow and also knowing where you are going to be.
You can then use the invoices to predict what the financial situation will be like for the future.
The Importance Of Realistic Financial Projection
When it comes to cash flow you are only as good as your financial projection. This is where your accounting will predict where they foresee your business to be in terms of profit and loss as well as what’s in the bank, what needs investment and where money needs to be spent.
Not having realistic projection means that it can be impossible to predict times when you really need to keep an eye on that cash flow and understand when it will need attention or when situations need to be rectified.
Making Sure You Can Manage The Shortfall
Finally, you need to ensure that as a business you can manage any shortfall you have in terms of cash flow, payables and receivables. A quick way to do this is to refer back to that original financial projection which should be able to predict the times when a shortfall might be in place, and therefore you can then plan accordingly to ride the storm and bring money back into the business.
I hope that these tips help you get a better handle on the financial cash flow in your business.
Images Courtesy of Pixabay and Pexels.
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