Good cash flow is vital to a business. It is true that the activities of many areas of the business influence the amount of cash that is available. If you are serious about improving the cash flow of your business, it’s vital that expenses are controlled and profits increase.
Below you’ll find five of the very best tips to set you on the right path.
1. Is Growing your Business a Viable way to Stimulate Improved Cash Flow?
In an effort to increase profits, and ultimately improve cash flow, you should review your pricing structure, consider whether a concerted advertising campaign will be beneficial, and think about the impact of improved customer service. This analysis also provides a valuable opportunity to appraise whether growing your business will help. If this seems like a wise move for your business, evaluate your finance options and consider whether a short-term business loan from a credible provider such as STBLA, is appropriate for your business.
2. Focus on Stock Control
If your business holds too much stock, there is every chance that you will experience the difficulties synonymous with cash being tied up. In addition, poor stock control will increase expenses related to storage and insurance. When a business practices effective stock control, stock is maintained at an efficient level.
3. Manage Accounts well
Few things are more expensive to your business than debtor accounts failing to be paid. It is critical that you follow up on overdue accounts. Be sure to set and enforce robust credit policies and discuss these with your clients in advance of work being carried out, so that both parties are clear about expectations and business policy. Although this may be a little uncomfortable, it is vitally important for successful debtor management.
Conversely, you may be able to negotiate extended payment terms with your suppliers, if your business needs or would benefit from them. In many cases, suppliers will accommodate longer payment terms as this flexibility is far more preferable to complete non-payment of an account. A longer time to pay your suppliers provides financial cushioning, enabling you to receive payment from your customers before finalising your accounts with suppliers. The upshot of this is that you will avoid out-of-pocket expenses.
4. Work towards a Reduction in your Business Overheads
In an effort to improve the cash flow of your business, it may be helpful to reduce the overtime work carried out by staff. Placing tighter controls on the overheads of your business may also help your business to enjoy better cash flow, as will a focus on more environmentally friendly work practices through a reduction in costs including electricity and water bills.
5. Access Expert Advice
A professional accountant or financial adviser is well placed to consider the individual situation of your business and provide considered advice pertaining to improved cash flow. Be sure to consult a qualified, experienced and credible professional if you do choose to seek such advice.
Positive cash flow is essential to the livelihood of your business. It is important to take steps so that your business enjoys prosperity and your tasks as a business owner can be carried out with as little stress about inadequate cash flow as possible.
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