In case of financial management of a growing company , cash is always the king. Cash flow management is the only solution between the time you pay your suppliers and collect from customers or we can say cash flow management means delay outlays of cash as long as possible while motivating customers to pay you as fast as possible.
Tips for Positive cash flows for Small business operation.
You would never have a cash flow problem unless you got instant payment for sales you made them. More or less, that doesn’t happen all the time, here comes your cash flow management which plays a vital role to improve the situation and turn receivables into cash. Here are prominent techniques for doing this:
- Exciting discount offers to customers those who are punctual in paying bills.
- Pre-payment benefits to the customers.
- To all new non-cash customers shall only be entertained with credit checks.
- Old outdated inventory should be closed in best possible way with minimum benefits.
- Slow payment issues should be promptly handled with regular invoices and follow up.
- An idea to do business with slow-paying customers by introducing CASH ON DELIVERY option which helps to maintain customer base rather than decreasing the same.
While managing a small start-up company, we have to keep an eye over every single expense. Don’t go simply expanding your sales but also keep an eye on the unnecessary expenses. Control and examine growing expenses when you find your sales are going down with respect to expenses. Here are some more tips for using cash wisely:
- Don’t pay your payments on the 15th day if the due date is on 30th day. Read creditor terms carefully and utilize it smartly
- Always prefer the last day payment of your dues via electronic fund transfer that makes you remain good with suppliers also keeping your funds as long as possible.
- For any delay in payment it’s better to talk with your suppliers. You’ll need their trust and understanding resulting into discount offers.
- To reduce overall costs ask your vendors for discount for pre payment they may produce with a discounted value.
- While choosing suppliers don’t always go for cheap ones rather comparing their quality of material. Resulting into more flexible payment which will improve your cash flow more.
- Before Overspending you have to keep your mind calm and decide which and what expenses are mandatory for your startup, because every single penny in a business matters it’s better to grip over useless lunches for business meetings, costly software’s, advertisements. It’s always better to choose pocket friendly advertisements like digital advertisement over physical hoardings.
The motive of any business is making profit, by maintaining the adequate Cash flow in the company. We have learnt a few lessons from business – balance sheets and income statements are just the basic operations of a business but maintaining a healthy cash flow at all times is a real world challenge.