Top 8 easy ways to improve your Cash Flow Management for Small Business
Cash flow management for small business is vital to the
success of any small business. Cash flow is the term used to describe
the movement of cash in and out of the business. It is important to
monitor this and make a plan to ensure there is sufficient cash to pay
expenses as they fall due. Managing cash flow can be a challenge for
many small businesses, especially in the start-up phase where a lot of
money is being paid out and not a lot is coming in. Online Bookkeeping services help you in manage cash flow.
Best 8 Effective Cash Flow Management for Small Business
- Invoice promptly – Once work has been performed or
products sold you are owed money from your customer. It is important to
send out invoices as soon as possible. Many small business operators
make the mistake of being so busy doing the work that they leave little
time to do the invoicing.
- Collect Receivables – Ensure you follow up
outstanding accounts. Send reminder notices if necessary but nothing
beats a phone call direct to the person responsible for making the
payment. If the other business is having cash flow problems they may be
holding back payment in order to improve their cash position.
- Offer clients a discount for early payment – This
is a great way of receiving prompt payment from your customers. If your
business has debt then it is probably paying interest of approximately
7%. By bringing in the payment early you are saving the difference
between this interest and the 3% discount which is 4%.
- Pay creditors only when they fall due – While in sales we want to receive payment as soon as possible, with your purchases we want to delay payment for as long as possible. This is free credit to your business. Take note of payment terms and don’t be afraid to renegotiate them with your suppliers.
Cash Flow management is the Fuel of small business that runs a small business successfully.
Contact us here for cash flow management for small business.
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