What are the Best Tips to Improve Cash Flow
It is a very important questions in the minds of every single human being that how to improve cash flow. So let me tell you friends, it is not that hard. All that you need to this is keeping a control of your finances. As you know, cash flow is the lifeblood of any businesses. Cash comes when we sell something and the sale of assets. We spend cash to pay out all the expenses and cash obligations of the business. The goal of good cash management is to have good amount of cash in hand whenever you need it. This is a very simple yet complicated concept, but if implicated in right way, it can sort out the biggest financial problems. As long as more money is coming into the business is more than what is going out, many people will not think of the right cash flow management, that makes them prone to cash flow dangers. If you start learning good cash flow techniques, you can ensure that you will always have enough of cash to meet your necessary cash obligations. Availability of adequate cash helps you to obtain maximum funds that are required from external sources at right time, right form. Shortage of cash flow can result into the loss of goodwill, embarrassment and in the extreme conditions, even bankruptcy.
If you follow the below tips, you can save yourself from the extreme aftermaths of inadequate cash flows:
1. Collect your payments on time :
Try to get your customers to pay you as soon as possible. Do not follow credit system while selling your goods. Try to make the payments in the prompt manner too. Always remember that never give more time to customer to collect payment fro him. As long as he will not pay you, the lesser are the chances that you will receive full payments.
2. Short-term loans:
If you think that you have a good bank record and you can have to have a short term loan to pay your immediate needs, go for it.
3. Increase sales:
Increased sales will help in increasing cash flows. But if large part of your sales are on credit, with the increase in sales, your accounts receivable will increase too, and not your cash. During that, inventory gets depleted and it needs to be replaced. Because it will take some 30 days time to collect the payments, therefore a significant increase in sales can deplete firm’s cash reserves.
4. Managing Payables.
It is equally important to mange payables also. An important strategy is to A key strategy is to bring cash into the company asap, then hold your cash as long as it is possible by managing your payables. You should prioritize to whom you should make the payment at first.
5. Start investing your Cash.
If you’re thinking that your cash flow is regular and good too, start investing it in the right way.