When it comes to your business, cash flow is something that is massively important to your business. However, as things move forward with your business, the plates keep spinning and in theory, you may lose sight of the important aspects and what needs to be kept on top of. The accounting side of things is definitely one thing you need to keep an eye on so how can manage the cash flow of your business better? How can you keep things in the black rather than the red? Here are some of the best ways to do it.
Get Paid When You Invoice
When you send out an invoice, many will offer a thirty day window for payment, and most of the time this is just a generic way of doing things. But, this means that although you know the money is coming to you, chances are you need to wait before it lands in your bank account. The same can be said for your invoices that you receive. It might be worth having an invoice template that you use regularly. A free invoice template can be downloaded online and it gives your business consistency in terms of how you invoice and what the guidelines are when it comes to waiting on money to be paid.
Paying Out Your Invoices
As mentioned previously, as you get the benefit of a thirty day window for payment when things are invoiced through the trade it is important for you to take advantage of this. Keeping the money in your business bank account as long as possible helps your accounts to look healthy, and keeps you on top of things such as cash flow and also knowing where you are going to be. You can then use the invoices to predict what the financial situation will be like for the future.
The Importance of Realistic Financial Projections
When it comes to cash flow you are only as good as your financial projections. This is where your accounting will be predict where they foresee your business to be in terms of profit and loss as well as what’s in the bank, what needs investment and where money needs to be spent. Not having realistic projections means that it can be impossible to predict times where you really need to keep an eye on that cash flow and understand when it will need attention or situations need to be rectified.
Making Sure You Can Manage the Shortfall
Finally, you need to ensure that as a business you can manage any shortfall you have in terms of cash flow, payables and receivables. A quick way to do this is to refer back to those original financial projections which should be able to predict the times when a shortfall might be in place, and therefore you can then plan accordingly to ride the storm and bring money back into the business.
Let’s hope that these tips help you get a better handle on your cash flow in your business.