Here are some effective methods for you to manage your cash flow;
Do you know what your bank balance is today?
If not, why not? That’s the first step to understand how much money you have. Try and get into the habit of reviewing your bank balance daily and determine what your income and expenditure commitments are for the following week.
Cash Flow is KING! – You need to understand what brings cash INTO your business and what takes it OUT. Once you have mastered this and you’re now trained to think of doing point no. 1 above then you’re on your way to understand how to manage your cash flow.
Manage your debtors diligently – Never allow them to exceed your trading terms without contacting them for an explanation. Keep on top of this because it’s easy to think that you don’t have time, or something else gets in the way. A sale is not a sale until the money is in the bank, that’s what I live by. You will spend an enormous amount of time making the sale, but until the money has been paid your efforts are fruitless. Follow up your outstanding accounts so the money is in your bank account and not theirs.
Manage your suppliers – If you know the suppliers well then why not negotiate extending your trading terms with them? If you have a sound relationship with them then they may be more willing to assist you.
Keep inventory levels down – Discard obsolete or slow moving stock as it’s just costing you money by sitting there in your warehouse.
Create a cash flow forecast – By doing this you’re able to see where there maybe cash flow surplus or shortfall that you need to action. It’s best to take the forecast out over 12 months to really benefit from the exercise.