11 Cash Flow Management Tips for Small Business
Hafana.com – When starting a business, managing cash flow in a disciplined manner is always one important indicator to determine the level of effectiveness of capital use and the level of sales turnover. With good cash flow management, you can determine strategies for developing your business easily. If the management of your business cash flow is not good, you will find it difficult to determine your business strategy.
This can make your business potentially fail or bankrupt. Therefore, it is important for businessman to manage cash flow properly for the sustainability of your business. Here are some tips that we provide to manage cash flow for those of you who start a business.
- Master Financial Management
Business has a very close relationship with finance. Therefore, you must master the finance of your own business. By studying financial statements, you can monitor cash flows, discounts, salary costs, taxes, costs of purchasing raw materials, equipment, and so on. In addition, you will also be able to analyze business conditions in conducting cash flow projections and sales turnover as future business prospects.
- Making Cost Planning (Budgeting)
To start a business, the availability of capital is indeed very necessary. Capital is usually used to buy raw materials and equipment costs needed for running the business. The need for capital is indeed better derived from own capital so that there is no risk of debt to other parties.
When making a profit, the use of money must also be taken into account, even though it is used entirely for business expenses. Cost planning can be done to avoid the possibility of a lack of funds. In planning costs, you must pay attention to various types of costs, such as salary costs, taxes, and various other operational costs.
- Limit Unrealistic Spending
Expending too much can make your business cash flow unfavorable. In starting a business, you should really maintain your cash flow by avoiding various expenditures that are of too large value. If necessary, forget about expenses for costs that don’t support the business and try to save money by reducing these expenses. However, don’t let the cost savings actually tend to cause your business performance to go down.
For example, you can use used equipment that is still suitable to save on the cost of purchasing equipment for your business. Don’t waste money on less important expenses, even though your cash balance is excessive. If you have a capital expenditure plan, you need to consider the benefits, whether it is able to increase sales.
- Look at the Cash Flow in and out properly
In doing business, it would be wiser if you run a business not only centered on profit. In order for your business to run more, and cash flow can continue to rotate, the sales system must be encouraged. In sales, the quantity of products sold may be a small profit, but if you are able to sell a lot, then the cash flow will go smoothly.
You need to inculcate a small business principle, but can sell many products. In addition, a regular look at cash flows also needs to be done to find out the details of the stock to be sold to consumers, check the bills of the suppliers, and receivables from buyers. This is important to do regularly so that there are no bad bills or double payments.
- Have a Reserve Plan
In starting a business, there are a lot of unexpected things that might happen, such as equipment that suddenly cannot function, delivery is hampered, and so on. These unexpected things will incur additional costs for your business, which can add to your cash expenses. To deal with various problems, you also need to develop various strategies as a backup plan for your business. For example, you can leave cash reserves for emergencies, establish relationships with banks or investment companies to get loan funds, and so on.
- Terms of Shopping with Cash Transactions
Providing payment transaction services only in cash is the easiest way to be implemented and is quite widely applied by business beginners. This can encourage your business to avoid bad credit and help your business turn around faster.
- Collecting Your Customers Debt On Time
Sending customers payment invoices on time will help increase your income faster, while speeding up cash inflows. Make sure you immediately provide an invoice to the customer immediately after the purchase transaction so that the customer can pay it as soon as possible. You can also offer discounted sales offers if the customer immediately pays the bill within a few days. This can also help you to get your customers to pay bills as soon as possible.
- Separate between Personal Account and Business Account
One of the things that is often done by beginner business people is to combine personal and business accounts. This should not be underestimated, because money that is supposed to be your business capital can actually be used for personal purposes with mixed accounts. If your personal and business accounts are separated, you will also find it easier to analyze your business’s revenue and expenses.
- Separate Cash Enter & Exit accounts
Separating revenue and expenditure accounts is one way that can make it easy for business beginners to manage the company’s cash flow. In addition, separate business accounts can also simplify, while speeding up the process of checking financial statements. One example is that you can separate your tax payment account from other expenses, so you can make payments in a timely manner. This can also prevent the possibility of penalties for businessman, due to late payments.
- Make a Cash Flow Statement
Don’t forget to make a cash flow statement, so that your business doesn’t run out of cash and has to close the business. A cash flow report is a financial report that contains records of out / in real money from various posts.
Separate business financial statements such as this are intended so that your business can be monitored easily and neatly recorded, so that it can be used for various business needs. With a cash flow statement, you will find it easier to find out the complete business situation. In addition, cash flow reports can also make it easier for you to make a decision quickly and precisely.
- Commitment and discipline
Last, but not least, the most important thing so that your business and financial cash flow management business can run smoothly is commitment and discipline. This is closely related to work ethic, and commitment in carrying out the concept of business finance.
Although it is not the main guarantee that your business will succeed, at least some of the tips above can help your business to be managed well from time to time.
So many easy tips for managing cash flow for those of you who are interested in trying to start a business.
Managing your cash flow in the best way possible is very important so you can focus on your business. Prepare your business for unexpected and difficult ups and downs you can do by taking concrete steps.
Thus, good preparation can make your business face anything. Besides that, your skills and cash to handle every problem can bring your business back.
We have a recommendation for small business or individual who care about their cashflow or money management, you can visit http://finance.imatasa.com/ to track your income and expense, they provide free sofware to use which is good for small business or individual to save cost rather than rent or buy a software to track your cash flow.
Software Source :