You often hear the word cash in your day to day experience. If you are part of the world of business, then for sure you know what cash is. This is a basic term that is always encountered in business.
From time to time, you may even hear about the cliché “Cash is King”. Actually, there is truth behind this saying. If you want to achieve a successful business, it is important that you know how to manage your Cashflow. So how are you going to ensure that your business is stable with regards to its Cashflow? How can you improve your Cashflow and minimize headaches too?
If you have been searching for these answers, David Guest is a Business Coach in Melbourne who has got tips that could help you manage your Cashflow effectively and efficiently.
Here are his 10 tips for getting on top of your business cash flow problems:
- Invoice on a regular basis. You must be very direct to your customers concerning the billing terms such as if an upfront deposit is required or an invoice is based from a completed work or from a completed project. On time billing can help you achieve a consistent cash inflow.
- Incentives for Prompt Payment. To keep the cash coming into your business, it is best that you give rewards or incentives to customers who pay on time or who pay before the due date. This strategy can help entice customers so you can get the ball rolling towards you all the time.
- Enforcement of Credit Checks. To maintain a steady influx of cash into your business, you need to know your clients well enough if they are really capable of paying you. You should not give credit to those clients of yours who are rated as credit risks.
- Excess Cash for Investment. If you have got large sums of cash just piling up on your drawer or your safe, and then let it not stay there for good. Instead, invest it to keep your cash working for you like depositing it up into interest-earning savings accounts and term deposits.
- Set a Budget. Always remember to stick to your budget. This will also help you to forecast the future of your business as well.
- Take Your Time. To maintain a positive cashflow, it is important to manage your money accordingly. You must pay all your bills on time to avoid penalties.
- Raise Your Price. If ever you have difficulty in paying your bills, one scheme that may help you resolve this predicament is to raise your selling price. You need to benchmark your price against your competitors. Remember that to stay in the business, you need to earn a profit.
- Prepare an Alternate Plan. To cover emergency business expenses, you need to set up a line of credit with your bank to tide you over in times of liquidity crunch.
- Excess Inventory is a Big NO. You must have to remember at all times that having an excessive inventory always tie up your money. You need to manage your inventory closely to avoid unnecessary inventory stocks and free up your cash.
- Be Efficient. It is best that you deliver your products to your customers on time. Any delays can surely disrupt cashflow.
To keep your business healthy and always on the move, you need to effectively manage your cashflow. The above tips can surely help you achieve a positive cashflow in your business.