How To Manage Cash Flow?
We are living in uncertain times, where it has become challenging to predict the future. After coronavirus struck the world, it was an eye-opener for many and people realized that they need to set their priorities. In most cases, small businesses were affected significantly as they didn’t plan how to handle such scenarios. According to Austin American Statesman report, one-third of the small businesses in US ceased to operate during the pandemic.
In most cases, it could have been avoided if these businesses had an effective strategy in place but unfortunately, they didn’t. If you are looking out for some effective ways to manage cash flow then read on:
Having fast payment process:
Remember, when there are good times, there are also bad times. You just need to have an effective strategy to bail you out when things aren’t going your way. One of the things to keep in mind and check is- YOUR CUSTOMERS ARE CLEARING THE DUES.
A fast payment process would help balance the cash flow. As a business maintain transparency in communication and let the customer know they need to pay their dues at a specified or agreed time. Further, it would also give you a peace of mind as you don’t need to chase them and get the money to run your business.
This is where big companies play out well as they strategize cash flow; they have a professional approach to handling each customer and have fast payment process. As a small business, you need to also follow a good approach and make the customer understand how important is to clear the payment to have a healthy business relationship.
Profitability:
If you’re getting business, don’t think everything is going fine. You need to check whether you’re getting enough profit to sustain your business.
Investing a huge amount but getting less in return would do no good for your organization. Now, there are high chances, if you’re a start-up you might not reap enough profit, but a reasonable profit is also good and you can always increase as time goes by.
It could be a challenge for you as you need to check every product and service that you are developing or following, and cut down time and investment on the same, if it’s not yielding desired profit.
Rent a product:
It could be tempting to buy product for your business, but remember every small business can’t afford it all while starting. So, it is advisable to rent a product that you need immediately and later after having enough cash reserves you can go for the purchase. This way you can get a better idea about how a specific product or service is used and whether it is really important to go for the purchase.
Having a planned invoice process:
It’s better to send invoice at the right time to avoid mayhem at last stage. Find out absolute information about the person to whom you are going to send an invoice. Make it precise to understand it in a single look.
You should remember, when you provide straightforward information, customers consider it a professional approach and would like to associate with your business.
Partial payment:
Have you come across a scenario, where you receive a big project or order and the customer informs payment after completion?
If yes, it’s better to ask for partial payment in such cases. Remember your resource or employees would be working to finish that project for a longer time. So, how are you going to manage the cash flow in such cases? It could be really challenging, so asking for partial payment would lighten your burden and you could easily manage the entire scenario.
Conclusion:
So, we can conclude if you’re a business whether small, mid-sized, or large enterprise, you should always give top priority to cash flow. It’s a common sense, how are you going to run a business without continuous cash flow?
But still, many businesses just look into the present without thinking about the future, it’s high time they plan, strategize every approach most importantly manage cash flow. This would act as a protective shield and protect them if any challenging scenario comes forth.
