fbpx

Managing Your Small Business Cash Flow: Part 1

Managing Your Small Business Cash Flow: Part 1

One of the most common causes of business failure is inadequate financing. When you own your own business it is up to you to make sure that the finances are in order and that you have enough cash to pay for any expenses that may come up. So what is cash flow and why is it so important? Simply put, cash flow is the lifeblood of your business and comes from sources like customer payments, investors, or interest on savings or investments.

Having a positive cash flow within your business is essential if you want to purchase inventory, expand or simply to pay your employees. Positive cash flow is also an indicator of financial health, making your business look more
appealing to investors and financial institutions.

Cash is King

This is an expression that is thrown around a lot in business and it’s an expression filled with truth. Cash flow is needed for:

Keeping up with debt
Sometimes it is necessary to borrow money, but having no monthly repayments will free up your cash flow.

Growth
This can only be achieved if you have a positive cash flow to invest in your business.

Flexibility
Having a strong cash flow allows you to be more flexible when dealing with unexpected situations.

Staying in the Green

What can you do for your business to keep it in the green? Well thankfully there are many ways to do so:

Lease, don’t Buy
This might be a controversial one, but hear me out. We all know that leasing supplies/equipment/real estate usually ends up being more expensive than buying, but by leasing you pay in small increments which will help to improve cash flow.

Inventory
Make sure that you know what stock you have, and that it’s not lying around gathering dust. Perform inventory checks regularly. Don’t buy items that don’t sell. If you’ve had items for too long, sell them off at a discounted price.

Loan options
Sometimes you just need a loan to help you get through a financially difficult time. Make sure that you investigate all of your loan options because there are now more options than just banks. Fintech companies
like GRID Finance are on the rise and are definitely worth looking into. If you can, consult a financial advisor or accountant to go over the best options for you and your business.

Don’t get caught with inadequate financing. Seek advice from professionals. This is your business that you have built up, so don’t be careless when it comes to managing your cash flow. Strong cash flow will allow your business to grow and make you more financially stable. In this first part, I discussed some of the options available to you to improve your cash flow. Next week, in part two, I’ll look at more ways to manage your cash flow, so stay tuned!

Tags:
,
No Comments

Sorry, the comment form is closed at this time.