Sustaining a good cash flow is vital to the success and long-term viability of your business. Basically, the quicker cash goes in and the slower it goes out, the better. This is because your money will stay in the business and works hard for you. To ensure this, you need to manage your business finances properly and maximise the amount of capital you have. Here are some tips to help you do that:
Cut corners where possible
Learn how to allocate your resources in order to stretch your budget as far as possible. Check your outgoings to see if there are areas where you can possibly cut corners. For instance, if you are renting a commercial space but you spend most of your time on the road, might as well get a serviced office in Manila and forego unnecessary expenses, such as building maintenance costs or equipment purchases. It pays to assess your needs and priorities well so you can make better financial decisions.
Get paid on time
This is arguably the easiest way to ensure you have a continuous supply of money to keep your business running. Keep a record of payments so it’s easy to see who has paid their dues and who hasn’t. There are many ways to make sure your business gets paid. One way is by sending reminders to clients well in advance of their payment schedule. Another way is to enforce strict payment terms, which should be set down early on when talking to new clients. Staying on top of your invoice management is important to free up the cash you need and to maintain a stable working capital.
Keep tabs on your inventory
If you’re selling any sort of goods, you’ll have capital locked away in the items that don’t get sold. In order to keep your money actively working for you, evaluate how fast each item gets taken off the shelves and make sure not to buy any more of any slow-moving products. This way, you don’t have to wait a long time to get a return from the goods you’re selling.
Make a weekly cash flow statement
Accounting is a crucial task you should do to assess your business’s performance periodically. Consequently, it’s important that you do it accurately in order to see the actual state of your finances. You can make use of back-office software, such as Quickbooks and Expensify, to create your cash flow statement. Once it is finalised, look for places where capital is locked up and find ways to free it in any way. Through this, you can have a firm grasp on how to make your business more efficient and financially independent. Make sure to review your reporting tools on a regular basis so you can easily adapt to the changes in the business environment.
Get professional help
No matter how careful you are about managing your capital, it’s still possible to have clients who refuse to pay on time. In this case, you’ll need a local financial services provider that offers solutions to free up your money, such as invoice discounting or line of credit. They can help you maintain a healthy working capital without being at the mercy of irresponsible customers. Although this might entail an additional expense for you, the financial freedom you gain will be worth it.
By learning how to handle your cash flow and put your capital to good use, you can be well on your way towards entrepreneurial success.
AUTHOR BIO
Regus PH is one of the many branches of the multinational corporation Regus, a leading provider of cost-effective business solutions. They provide serviced offices, corporate workspaces, state-of-the-art meeting facilities, mobile working solutions and business support services that cater to the needs of modern-day entrepreneurs and corporations. Regus PH offices can be found in major business hubs in the Philippines, including Manila, Makati and Cebu City.
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