Taking Charge Of Your Own Cash Flow

The management of cash flow is essential in all businesses. With proper cash flow planning, salaries, overheads, and expenses can be paid on time. Additionally, good cash flow management can let business owners plan on expanding their businesses.

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Simply put, taking charge of a business cash flow can prevent business owners from struggling to pay their bills and help them take their organization to the next level. Here are a few tips and advice on how you can oversee your cash flow.

Evaluate Your Cash Flow

Evaluating cash flows can help businesses project their future. The evaluation of cash flow includes accounts receivable, accounts payable, operating expenses as well as any sort of cash transactions that are involved in your business daily.

Follow these steps to evaluate your cash stream:

• Cash flow projection – Anticipate all cash that is coming in and going out for the upcoming quarter, year, or week. Theses estimations can allow you to have a clearer picture of your business’ current financial situation.
• Be detail-oriented – Ensure that you are as detailed as possible when making projections for more accurate cash flow estimates. Avoid mirroring past performance and base your projections on the current financial situations for a more accurate prediction.
• Include all cash transactions – Do not overlook things that involve cash transactions such as temporary hires, sales fluctuations, maintenance, customer payments, interest earnings, tax rebates, etc.

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Invoice Immediately

As soon as you close a deal, make the habit of invoicing your client immediately. Waiting on payments can affect your cash flow management, thus, resulting in slow business progress. As most businesses offer up to 30 days payment on their invoices, business owners should aim to improve the speed of receivables to avoid any unnecessary delays.

Request Deposits

Large orders, projects, or contracts can involve large sums of money. As a business owner, it is recommended that you request an upfront deposit of at least 10-20% before moving forward with the project. This is to ensure that you have enough funds to begin work and cover the expenses until the next stage of a project. Once your work has reached 50% completion, request for a further 50% deposit which will help you minimize any potential bad debt before the completion of the project.

Look into Mobile Payment Solutions

With today’s technology, payment can be made conveniently with a mobile phone. Business owners can download payment applications that will allow them to get paid on the spot without offering any credit terms to their clients. To encourage immediate payments, you can offer early payment discounts to your customers.

Track Down Slow-Paying Customers

Customers who tend to be late on payments can cause hiccups in cash flow management. Make sure that you track down these clients and ensure that they pay whatever amount they owe. With slow-paying clients, it is advisable to avoid doing business with them in the future or implement a COD (cash on delivery) policy.

Get Financing for Your Business

Now that you are informed of the different ways of managing your cash flow, you might want to consider taking your business to the next stage with the help of business loans. If you are looking to expand your business with new equipment, inventory, or employees, CMS Funding is here to help. Our dedicated finance team will work closely with you to see your business thrive.