Introduction
The financial aspect of operating a business can make or break your company. As your local Accountant in Ryde and Greater Sydney, we can help in managing your cash flow which can have a significant impact on how you run your business. You probably won’t survive if you can’t manage your company’s cash flow, no matter how good your business plan is, how financially viable it is, or how many investment funds are interested in supporting it.
By attempting to implement these cash flow management strategies, you will quickly gain control of your company’s financial performance and learn how to boost cash flow within a business.
Recognize the seasonality of your sales.
Businesses strive for long-term positive cash flow. However, because seasonality tends to reflect a mismatch in the timing of sales revenue, cash flow can be irregular, posing challenges in managing the firm’s financials. So, even if your revenues are declining due to the seasonal slump, you still must pay your fixed expenses.
Refinancing a bank loan with varying monthly installments can allow you to manage your working capital more effectively. You should first consider whether you can sell your products during your slow season, or you’ll have to find another source of income.
Recognize your fixed and variable expenditures.
A good cash flow governance system should ensure that you always have enough cash to pay your bills on time. Even successful corporations can struggle if cash flow is not appropriately controlled. Variable expenses can seriously compromise your company’s viability. As your local Accountants in Ryde and Greater Sydney, we can create a cash flow forecast which can provide you with a detailed monthly income and expenditure forecast which can help you make smart business decisions.
Make it more attractive for customer to pay early
Everyone likes a good incentive, and if you offer a discount to customers who pay their debts on time, you’re creating a win scenario for both of you. Of course, getting the money in regularly will help your cash flow. Consider providing a discount to customers who pay their invoices by a certain timeframe. Offer a small discount if your invoice terms are Net 30 (due 30 days after the invoice is sent), and you’d want your customers to pay less than a week after receiving their invoice. Customers searching for a decent deal are more likely to pay their bills on time, which means you get paid sooner.
As a result, make it a point to remind your customers when their invoices are due.
Many accounting programs and invoice management software include installed invoice reminders that you can send to late-paying customers instantly.
Accounts payable should be managed effectively
Setting up and coordinating your accounts payable process is critical to boosting your company’s cash flow. At MYM Accounting & Business Consultancy, we recommend that you identify suppliers with whom you can collaborate effectively. During busy times, strengthen your relationships, pay your bills on time, and discuss obtaining discounts for purchasing in bulk or making a commitment to service provision over a longer period of time. By cultivating these relationships, you may be able to negotiate more favorable payment terms – in advance.
Automate tasks and processes by utilizing technology.
Accounting, with its manual processes and repetitive tasks, is an ideal place to introduce automation into your business. Accounting involves a lot of routine tasks that, while banal and repetitive in themselves, can ultimately cost your organization a lot of money if you have to hire humans to do them all. They are also time-consuming and may result in more silly mistakes if done manually. As your local Accountants in Ryde and Greater Sydney, we can help you automate all your accounting processes.
Certain accounting processes, particularly those that are repetitive, can benefit from automation, eliminating the need for manual entry. One common way to simplify this process is to instantly pull reports from variety of sources and then populate an Excel spreadsheet with the data. You can make use of cloud based accounting software such XERO, Quick books or MYOB in order to look after all your accounting needs as well.
Credit cards can be used to improve cash flow.
You can improve cash flow by shifting more payments to business credit cards, especially those that are due right away. Consider credit cards with special features aimed at assisting with business cash flow.
Certain business credit cards, for example, may allow you up to 60 days to pay. Some allow you to carry a balance from month to month. Some allow you to select the time of month you want to be billed in order to accommodate cash flow behavior you’ve observed. Some even offer an early pay refund if you have spare funds in a specific month.
Conclusion
One of the most difficult aspects of running a business is dealing with cash flow issues. However, if you think rationally about your business, cut excess expenses, and stay aware of these potential drawbacks, you will be head and shoulders above your business contemporaries in terms of long-term success in business. Hiring an accounting professional like MYM Accounting & Business Consultancy will help you stay on top of your cash flow at all times.
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