6 Awesome Tips For Business Cash Flow Management

Cash is the king, and money becomes tight when times are tough. Small businesses need to be proactive to keep their cash flowing, especially when borrowing money becomes more expensive and difficult. These cash flow management tips will help you get through the storm.

Keep your eyes open for the weather

Knowing when it will arrive and what direction is key to weathering any storm. Be aware of changes in economic conditions and keep an eye on key indicators that will help you manage your business.

Prepare cash flow projections for next year. This will allow you to identify the changes that need to be made and when.

Reexamine Your Credit Policies and Credit History of Customers and/or Clients

Cash flow management is a key part of managing your customers’ credit.First, you should get rid of unprofitable customers. These are the ones that are more expensive to manage than they make a profit. Pay attention to those with a track record of late payments. Finally, credit checks should be performed on all new credit applicants.

You don’t have to give credit to everyone. Customers with a poor credit history may need to have their credit terms changed or removed entirely. If you have to decline credit for a customer, do so with as much tact as possible. You want them to be a customer in the future. You can send a polite and regretful note to inform them that credit cannot be extended at the moment. Also, state the reasons. You can make it clear that they are allowed to transact cash. To sweeten the deal, you can offer cash discounts.

You can speed up payment by taking action

Invoice promptly. Invoicing late gives customers the impression that you don’t care how long it takes.

Take steps to encourage prompt payments, such as clearly stating the due dates and sending notices about overdue payments. Then, when necessary, you can use collection services. It is always better to get the money as soon as possible than to have a bad debt.

Check to see if payments can be extended for suppliers

Check with your suppliers to see what credit terms they allow. Although most suppliers will only pay within thirty days, you might be able to extend the term to sixty days or even ninety days. This will allow you to keep more cash in your cash flow.

Renegotiate Contracts

Contractors, lenders, landlords, and lenders are all subject to economic changes. It is worth trying to renegotiate.For example, if your bricks-and-mortar business lease is ending, you might be able to negotiate a better rate with your landlord, especially if another retail property is vacant. You will be able to free up more cash per month and generate more cash flow by signing a less expensive lease.

Cash Flow Management Tools

You can track, forecast, and manage your cash flow using a variety of software tools. You may already have the cash flow tools you need if you are using small business accounting software. Cloud-based accounting software can provide cash flow forecasting reports. Other software offers additional features for business cash flow management . For more information about accounting software, see Advantages of Small Business Accounting Software.

Many software products are available for cash flow management, forecasting, and budgeting. These products can be interfaced with most accounting software.

The outflow of cash flow is not a problem. Money will always leave your business. Business cash flow management is about keeping the money coming in on an ongoing, steady basis. These suggestions will help you keep your cash flowing.