Estimated reading time: 2 mins
Keeping track of the cash that is coming into and going out of your company accounts is vital if you want to run a successful operation. After all, if you don’t have good cash flow, you might be unable to pay suppliers or, even worse, your employees, which could lead to your business grinding to a halt!
To help you avoid that, here are some excellent ways to keep your cash flow situation in check and prevent your business from being brought down by a lack of funds:
Have a Cash Flow Forecast
You should always, as a business, keep a cash flow forecast with projections stretching between 6 and 12 months into the future. This will help you to avoid any shortfalls in your cash flow at any one time.
You can keep a basic cash flow forecast using excel to track monthly income and expenditures, but there are also tools like the one at demandworks.com, which can help you to keep track of this too. When you’re creating a forecast, you should remember to take into account seasonal variations in your business, such as extra sales in the lead-up to Christmas or the slow period you experience in the spring. A failure to do this could lead to cash flow issues cropping up despite your best efforts.
Send Invoices Promptly
If you want to keep the cash flowing in, then you need to send invoices out to your clients promptly and chase them up should they fail to pay on time.
If you’re in dire need of the cash and your clients are not paying up when they should, factoringcompany.net can be a godsend, buying up your invoices for a small percentage of their value. This is an option many businesses are unaware of, but one which can bring an immediate injection of cash when it’s needed, which means it is well worth considering.
Manage Your Stock Efficiently
If you’re a business that holds stock, it’s important that you manage it as efficiently as possible if you don’t want to run into cash flow problems. Ideally, you should reconcile your bank account and stock records together, so that you will always know what you have in stock and how much money you will need to put in a new order. It will also help to avoid making the mistake of holding too much stock and having too much of your cash flow tied up in your goods when you could be using it to pay the bills.
Foster Good Relations with Lenders
As a business, it is in your best interested to get to know and maintain a good relationship with local business lenders. You can do this by paying your debts on time and building up trust with your lenders. That way, should you experience difficulties and need a quick cash injection from time to time, you will be more likely to get it.
Maintaining a healthy cash flow can be difficult, but if you can do the above, it should ease your burden and ensure that your business stays strong no matter what is thrown at you.