Cashflow management is the crux of your business, no matter what type and size. And if you are a small business, its necessity becomes even more intense. Let’s check out how you should do it.
Presenting 5 Cashflow Management Hacks Every Successful Small Business Follows
- Knowing How To Invoice Right
Invoicing is, in fact, the essence of cashflow management. You should do it as soon as you are done with delivering your business product or service. Prolonging or delaying will eventually affect the bottom line of your trade. So, inculcate this habit of making it prompt and quick. Always.
Wondering how you’d do it? Attend to invoices immediately or positively at the end of the day. Should you be delivering a service, consider seeking deposits or payments in installments. Be proactive, not reactive.
“It is cash which gives your business its much-needed financial stability in case an adverse situation erupts.”
- Bookkeeping To Perfection
Your books let you account and report every single financial transaction that happens within the corridors of your business. You must keep them updated so that you don’t lose out on information when time comes for retrieval.
An organised and updated book allows you to have a glimpse of your company’s up-to-the-minute financial status and helps you in easy decision making. This, in turn, helps you prepare cashflow statements using the cash equivalents as reported on balance sheets.
“A business is more likely to give in to a mob than handle its cash flow statements. What’s interesting is the relative simplicity of the latter task.”
- Relying On Simple Accounting
Accounting means numbers and figures. If you can’t get the hang of it, hire professionals or outsource. Do whatever it takes to simplify the process. You should also depend on accounting software so that you can keep a track of your cash flow. It helps in making financial predictions.
A simple accounting process lets you set expectations for your business. Say you want to expand your payroll or purchase inventory. Do you have the required working capital? Are you cash strapped? Decide and then take your steps.
“Even the tiniest of leaks can sink a ship. The same holds true for a company’s expenses. Simple accounting helps you identify and correct the loopholes.”
- Being Compassionate, But Fair
Compassion is needed for business-customer relationships to survive. After all, it is your clientele that determines the success of your products and services, and the subsequent cashflow they invite. You have to be understanding. However, remember to be fair in your judgement.
Too much leniency leads to businesses becoming pushovers. You have to know how to be direct without being rude, especially while invoicing. If you are supposed to take up formal activities, you should. You shouldn’t be chasing cash. It should come to you, naturally.
“In times of trouble, leniency could almost become a crime.”
- Banking On A Cash Reserve
This is the ultimate way to manage positive cashflow. A cash reserve acts like a buffer system which lets your business adapt to changes and breathe. It is needed if you want your trade to stay competent, confident and financially secure.
You will be safe from the bickering of banks and stakeholders, especially investors. It will keep your economic cycle healthy and let you grab opportunities when they arrive. A cash reserve is a quick solution to business continuity as well.
“In business, money equals freedom. It should be available all the time.”
Yes, Cash Is King
No matter how clichéd it sounds, it eventually works for any small business, in fact, any business. To keep your cashflow going, hail the king and follow the aforesaid rules. Remember, in business, cash must work for you, and not opposite.