Cash Flow Management

 CASH FLOW MANAGEMENT

In every blog that I visited on this topic says "save save save". Now saving isn't as much fun as spending is it?

There are statistics that states, 60 percent of businesses that go bust are still profitable but just ran out of cash. Running out empty and still continuing so without attempting to change the methodology is just like squeezing a dry sponge over and over again for the water that isn't there.

 Few ways to effectively manage cash:

1. Acceptance and complete understanding of your working capital: It can be a small or a large scale business, evaluation of the company's current working capital is vital. It is something one has to keep on updating themselves with as it will be a forever changing factor 
2. How much do the clients owe you/ you owe the clients?: If it is a Finance or a money lending industry you have to keep such crucial factors in check.
3. Ensure your Business' investment doesn't exceed your income: Playing smart is the way to success. Make sure the investment is enough to fund your working capital needs. If not, cut your drawings, as retained profits are by far the best and cheapest source of working capital.
4. Then, plan ahead: Prepare some cash flow forecasts for the coming year. If you find it difficult to predict your sales, complete all the outgoings first, and then see what sales you need to cover your outgoings. At least then you have a known target.
5. Review your systems: Do you capture all time, costs or disbursements to invoice? When was the last time you checked suppliers costs to ensure you haven’t been overcharged or been billed for items you haven’t received?
6. Speed up your cash conversion cycle: Ask for a deposit, put customers on retainers or get them to pay monthly. Cut your inventory levels, maybe by arranging for your suppliers to deliver the same or next day, or negotiate longer payment terms. 
7. Diversion: Do not divert your cash flow towards unplanned or sudden branches.
8. Expanding: Do not expand your order abruptly without increasing your working capital.
9. Make it as easy as possible for customers to pay you: Always quote your bank account number on your invoices, and ask for direct credits or automated payments. Why wait for a cheque to be posted in this day and age?

Cash flow management is a proactive approach. It reduces a person's unwanted stress and gives the business owners a sense of peace and satisfaction to take on the platform of success.

These are some factors that I came across. If you have any new ideas I'm all ears!! 

SHS wishes you success in every step ahead.