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Cash flow is the money count of the business. It is measuring the money flowing in and out of the business. In other words, Cash flow is the lifeblood of any business. In order to sustain and grow, a business should have more inflows than outflows at a given amount of time. However, in most cases, this scenario is completely the opposite. In order to develop business relationships, the business buys the inventory and tries to get it delivered to the customers. Also, at the same time, they tend to pay their sources such as suppliers and wait till customers pay them for the business given. With low cash flow, businesses can easily get pushed to the brink. Business cannot operate successfully if outgoings are greater than incoming. Thus, monitoring the cash flow is very critical for any company.

There are a number of ways where we can make company cash flow alive

Invoicing Promptly

Once the work was completed, the business should invoice within 24 hours. Businesses who tend to invoice late usually get paid late, which is not good for the cash flow.

Change the method of Invoicing

Change the method of InvoicingPreviously, the majority of the invoices were done by post and postage can be delayed and therefore, your payment. Choose the prompt way of invoicing e.g. emails.

Big Sales

Usually, when you bill to a customer on a big sale, there is usually much cost involved to your company. They ask the payment in advance to make sure you have enough cash for the purchase of the inventory and pay the staff at the same time.

Budget

Budgeting you’re incoming and outgoing is the best way of managing the cash flow. Always have an estimate of the cost involved in the purchases of raw materials, budget for salary payment and count the regular fixed cost of the business.

Credit rating

The company should have a good credit rating, so do the business owner. The Business owner should have a second plan to fund the company in case of fund shortfall or always have a bank overdraft for survival purposes.

Debt Collection:

The company should have policies for debt collection and have a certain way of charging the customer. Email reminders for the due payments and calls will always keep your cash flow healthy.

For more such tips on Bookkeeping and accounting, contact us – 03 9310 7871

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