Cash flow management is one of the most important facets of owning and operating a successful small business. Whether you’re just starting out as a business, or you’ve been operating for years on end, how you manage and oversee your businesses cash flow can impact your growth.
Have you grown so quickly you don’t know what to do with the newfound flow of cash? Or maybe you never took the time to truly understand a well-managed cash flow and are now scrambling to catch up? Whatever the case may be for you and your small business, there’s no better time than right now to learn what the top 7 tips to better your cash flow management.
1. Build your engine.
What do we mean by that? It’s really exactly what it sounds like. It’s crucially important to set your business up so that money is working for your around the clock. Building interest on your cash flow can be something most small businesses don’t take into consideration initially. Think about it, the faster your business grows, the more interest you’d be building!
Opening up an interest-bearing business account that would serve as your central hub for your cash is the way to accomplish this.
2. Use the software and use it well.
Knowing what your cash flow is and where it is can help you reduce your stress as a business owner. Take advantage of all of the accounting software out there on the market, and you can do this without breaking the bank. Any of these types of software allow you to monitor you cash flow management properly.
3. Don’t make payments all at the same time, spread them out!
Going in and making your payments on bills, etc all on the same day can be a death trap for your business’ cash flow management. After you pay everything, you’ve got nothing left to build interest or even cover any unexpected costs that may arise. Use your digital banking to go in and outline your payments each month so you’re splitting up any payments. This way you can ensure that they’re all on time while also being business savvy and leaving some cash flow in your engine.
4. Don’t let customers carry P.O.’s.
This can be a place where new small businesses especially can get caught up. They want to build a strong customer base so an owner will give customer friendly payment terms. Quicker than not, this becomes unsteady and dangerous ground that your business is being built on. Yes, you want to build a solid customer base but you can do this without letting them take months to pay an outstanding P.O. Doing things like online invoicing software that send automatic reminders and offer one-click payment options make it easy for them to not forget to pay you!
5. Time your payments.
The timing of your payments goes hand in hand with what we discussed earlier. Even when you’re breaking up your payments every month, the longer you can keep your cash flow in your bank account, the longer it’s earning you interest on every dollar. When making payments, schedule their automation through your online bank to be paid the last day before they’re due.
6. Cash flow reduction.
We know this sounds contradictory, but think about it for a moment. If you find yourself spending hundreds monthly on maintenance and repairs for capital equipment, you’ll save money by buying new equipment. Buy used equipment that’s still in good shape and keep them lasting by keeping them in as solid and working condition as you can. This will allow you to delay full on equipment upgrading costs until it’s absolutely necessary. Even in today’s day and age some other vendors are even open to bartering for your products for their supplies. Give it a shot and see!
7. Help payroll work for you.
Choosing the right payroll management software is a crucial part to your business cash flow management. Have your payroll account as a separate bank account from you main operating account. Then the day before paying salaries transfer the funds so that your cash stays in your interest-bearing account as long as it can. Direct debit payments can help save you money in your monthly overhead costs. Running on bi-monthly instead of bi-weekly payments, this will allow you to save on your admin costs each year.
If you’re looking for other ways to better your business’ cash flow management then now is the time to let Numetrica help you.
FreshHive.ca was not involved in the creation of this content. Information contained on this page is provided by an independent third-party content provider. FreshHive.ca makes no warranties or representations in connection therewith.