Cash is the fuel of a business. Running a business successfully requires a steady inflow of cash, so it’s important for business owners to fins effective and efficient ways of controlling cash flow.
“Poor cash flow management is causing more business failures today than ever before,” says Philip Campbell, a CPA and former chief financial officer of several companies and author of ‘Never Run Out of Cash.’
What is cash flow?
This is the movement of funds in and out of a business. It’s important to track this weekly, monthly or quarterly. Smart cash flow management means that individuals must have a laser focus on the drivers of cash.
A positive cash flow is needed to generate profits.
Tips on controlling cash flow:
Set Cash Flow Targets
By preparing and maintaining a cash flow forecast, you will be able to plan better.
Establish Clear Payment Terms
If you don’t know what your payment terms are, it is difficult to know when you are going to get paid. It’s generally good business to pay within 30 days, so you should encourage your clients to pay within this period.
You should invoice clients as soon as the work is completed. A good way to facilitate faster payment is by issuing your invoices via email. This way, the email gets there immediately and you will have a record of it being sent.
Create easy Payments for customers
Make payments as easy as possible for your customers. This way you can avoid unnecessary delays in receiving your payments. Electronic transfers or direct cash payments are the best options.
Use technology to manage cash flow
Cloud-based accounting can be one of the biggest time-savers. You can view your accounts on the go and you can be assured that your information is backed up safely.