I’m often asked for my top tips when it comes to running an effective business so I thought I would create a series of “Top Ten” ideas and pointers to help with various parts of running a business, and here is the guide to managing cashflow:
- Monitor your cashflow regularly: Keep track of your cashflow on a regular basis, such as weekly or monthly, to ensure that you have a clear understanding of your financial position.
- Understand your cashflow cycle: Know how long it takes for your business to receive payment from customers and make payments to suppliers, and plan accordingly.
- Manage your accounts receivable: Monitor outstanding invoices and follow up on any overdue payments to ensure that you are receiving payment in a timely manner.
- Manage your accounts payable: Keep track of your outstanding bills and prioritize payments to ensure that you are paying your bills on time and avoiding late fees.
- Create a budget: Develop a budget that outlines your expected income and expenses and use it to guide your financial decision making.
- Control your expenses: Monitor your expenses closely and try to reduce unnecessary spending to maximize your cashflow.
- Monitor your inventory: Keep track of your inventory levels and ensure that you have enough inventory to meet demand, but not so much that it ties up cashflow.
- Consider financing options: If you are experiencing cashflow issues, consider financing options such as a line of credit or a small business loan to help you manage your cashflow.
- Communicate with your creditors: If you are having trouble paying your bills on time, communicate with your creditors and try to negotiate a payment plan or extension.
- Seek professional advice: If you are having significant cashflow issues, seek the advice of a financial professional or accountant who can help you identify the root cause and develop a plan to improve your cashflow.
