Want to know two things that set apart business owners who are also experienced in managing cash flow? They’re pro-active with sustaining their finances and they’re never caught off-guard. Learn how to manage your cash situation as confidently as they do by taking note of these expert tips:
1. Focus on cash, not profit.
A business cannot run its day-to-day operations without having some cash to work with. This is the reason why most startups and SMEs use cash flow to measure their financial health.
Focusing on profits can be very misleading, since they only reflect what you’re earning in excess. To determine how much cash you actually have on-hand, you’ll need to keep an eye on your cash flow.
2. Get a head-start on targets (and other troubles).
Wouldn’t it be great if instead of doing guesswork, your business could make solid, financial decisions for the long run? A reasonable cash flow projection can help you identify cash crunches and budget goals a week, a month, or a quarter in advance.
While projections don’t show fixed results, they do provide useful templates for action based on your own knowledge of upcoming business expenses and customers’ payment habits.
3. Maintain good cash habits.
The best foundation for growth is always going to be a history of good financial practices. It becomes so much easier to manage funds when you have a ton of experience with income-generating and cost-efficient processes.
Creating a financial safety net for your business also involves finding a cycle that works specifically for it. You can then use the strategies which are already familiar to sidestep or address a cash crunch.
4. Have some cash on reserve.
If unexpected issues (e.g. a natural disaster, negative comments gaining traction on social media, etc.) affect your business you’re going to want to find solutions fast.
Having access to fast cash opens up your options when dealing with any sort of crisis, financial or not. This is because you able to “buy” or pay for the speed and convenience needed in providing immediate solutions for your business.
5. Always keep your bank informed.
Many small businesses have turned towards their bank for startup funds or extra financing during the course of their operations. For you to keep these kinds of doors open, you need to maintain clear and honest working relationships with your bank or account manager.
Update your bank regularly about where your finances stands and show how your business is a client worth their time and money. You should also be working closely bookkeeper or accountant in order to keep track of your business finances the best way possible.
To learn more on business and cash flow management, contact Omnis Group at 9380-3555 or 1800 99 66 90. Our friendly team of professional business advisers and accountants are more than willing to help.
