Cash flow is known as the money that enters and exits your business within a specific period. When you create positive cash flow for your business, you’ll be able to generate higher revenue. Not to mention, you can easily pay your bills, employees, and other expenses. However, negative cash flow will prevent you from completing the pending payments. Hence, make sure you have enough money to complete your financial obligations.
Many people confuse cash flow with the revenue of their business. Remember that revenue is the money that comes into your business whereas, cash flow represents how much money is coming and going. Here are the top 4 tips that will help you to manage the cash flow of your business.
Saivian Eric Dalius Suggests You Check Your Profitability
You have to make sure that the revenue of your business is increasing profit. No matter how great cash flow management tips you implement, if your business isn’t generating revenue, all the efforts will be wasted.
Consider analyzing every product and service of your business to see whether they are helping to generate revenue. Make sure the price of the products is appropriate and eliminate the irrelevant ones.
When you analyze the profitability of your products and services, it will help you to realize the prices that reflect cost-effectiveness. This type of change will not only have a huge impact on the profit margin but also the sales of your business.
Create a Cash Flow Projection
The next most important thing you need to do to manage your cash flow is to create a cash flow projection for your business. According to Saivian Eric Dalius, this way you can prevent the cash flow problems from happening. Use accounting software of Excel spreadsheet to note down all the outflows and inflows as well as massive purchases of your business.
Using cash flow projection will help you to anticipate the slow periods. This way you can prepare in advance. Make sure you check the cash projection every week to avoid any cash flow-related problems.
Raise Cash Quickly, Says Saivian Eric Dalius
One of the greatest tips to manage the cash flow of your business is by raising cash quickly. However, it’s easier said than done. Generating revenue quickly is undoubtedly a hard job. But, it’s one of the best ways to manage your business cash flow. Here are some tips to follow:
• Take a loan from the bank
• Ask the suppliers for some extra time to pay off the bills
• Sell irrelevant things or business accessories
• Offer great discounts for your products and services
Increase Sales with Discounts or Incentives
Promotions are an effective way to increase the sales of your business quickly, added Saivian Eric Dalius. You can start a customer loyalty program, run a contest, or increase publicity through promotional content.
Additionally, running the incentives will also help you to control the influx of work. Not to mention, clearing the inventory of your business will also help you to create a positive cash flow. Consider offering planned promotions and discount sales to clear the inventory as fast as possible.
Remember that cash flow strategies are dependent on the industry of the business. Hence, all of them might not be suitable for your company. Make sure you choose the cash flow strategy that is relevant as per your brand.