Stabilizing Your Cash Flow
|Sharon Boyd has nearly 25 years of experience between both the healthcare and marketing industries. In addition to being an RDH and content writing expert, she also holds a degree in business. Her responsibilities primarily include tackling the communication barriers between small business owners or healthcare providers and their prospective clientele.|
Stabilizing Your Cash Flow
Securing your business cash flow is a lot more tangible than growing money on trees. Without proper cash flow management, you couldn’t afford to pay the water bill to water your tree.
Cash flow is the amount of money moving in and out of your business day-to-day keeping operations bustling. Not reviewing your current cash position and future cash needs can bankrupt your business, forcing you to close up shop.
Here are some suggestions to consider proactively, that could improve your revenue logistics, which could boost positive cash flow.
Monitoring your business finances efficiently is viable because it shows the overall health and performance of your business.
Questions to ask and answer for yourself.
Factor in all your essentials that run your business, leaving nothing out.
Create an excel spreadsheet with all expenses going out and profit coming in. When everything is inputted and calculated and it shows more cash coming in than out, you are probably doing well. If it is showing the opposite, then something needs attention to find the loss.
Once you have recognized the good and the bad of your cash flow, it is time to get down and dirty to clean house, making improvements to bring better consistent flow.
One area that could cause a lack of cash flow is your Accounts Receivable, the money that the business should receive from its customers for the goods or services you provide.
Late payments hurt your capital. It is not a sale if the money is not in your bank.
Check how clear and accurate your invoices are to your customers. Offer a discount to customers for advance full payment. Set up auto-reminders that can be sent out 10 to 7 days before payment is due. Cutting ties with customers that are consistently late.
Get rid of dead inventory. Entice a sale with a lower price for products that are not going fast. Stop spending money on products that are not selling. Reduce your orders on materials for a period until the demand increases.
You might even need to raise prices on your products to compensate for the changes.
If your cash position allows for hiring an accountant to help you navigate your revenues, turn to your colleagues, who can recommend one they trust and pay attention to details.
For handling the basic daily transactions in your budget, investigate software to purchase for bookkeeping.
Investing your time to find your cash flow pattern. By watching it weekly, monthly, quarterly, and yearly helps prevent frantic moments to happen when there is a slow period.
Dollar bills might not be dangling from your Money Tree, but it’s getting plenty of water to thrive.