Tips To Manage Your Business's Cash Flow

Business owners must be meticulous in maintaining cash flow. Essentially, delays or stops in steady cash flow let you know when potential hiccups may occur and give you ample time to solve them. While profit projections and assets are on paper, it is cash flow that is used on an everyday basis in a business. As such, managing your business’s cash flow is one of the most important tasks you have, as a business owner.

Here Are Some Tips To Help You Manage Your Cash Flow Effectively:

1.      Use An Accounting Software:

·         Accounting software records every expense incurred with great ease.

·         It usually uses spreadsheets to keep a track of your cash outflow.

·         This helps you calculate and monitor cash flows simply and efficiently.

2.      Create Effective Ways To Cut Costs:

·         It is important to have strategies in order to reduce your overall costs.

·         To action this, prepare cash flow projections and compare them with cash flow statements on a monthly basis. This way you can highlight problem areas and plan accordingly.

·         Whether it is a cash crunch or excessive spending, this exercise will increase productivity and profitability.

3.      Consider Taking A Business Line Of Credit:

·         A line of credit on a business loan helps you use cash efficiently. Based on your business needs, it infuses your cash flow with a healthy dose of funds.

·         This facility lets you borrow as much finance as is needed and repay it only at the end of the tenor.

·         You can avail a line of credit of up to Rs. 30 lakh and pay interest only on the amount utilised.

4.      Lease Rather Than Buy:

·         Machinery can be expensive to purchase and depending on your industry and the size of your business, costs will vary.

·         To save funds, approach third-party companies that lease machinery.

·         This eliminates expenses such as the purchase of equipment, installation, training and maintenance.

5.      Invest In An Accountant:

·         Hire accountants and financial specialists as they can identify and isolate cash flow problems effectively.

·         Investing in a finance team helps maintain sound financial health so that you can focus on other aspects of the business.

6.      Build A Cash Reserve:

·         A strong cash reserve can help you finance losses and debts.

·         After all, you must have a reserve that can come to your aid in emergency situations.

7.      Liquidating Current Assets:

·         While all your assets won’t be easy to liquidate, you must have some current assets that you can.

·         Payments due to you and stocks are some common examples of current assets.

·         Having a good mix of current assets on hand can help your business in a dire situation.

·         You can easily sell these assets and get access to funds in a short span of time.

·         This helps maintain your cash flow.

However, there may be times when, despite implementing these tips, your business does not have enough cash flow to keep day-to-day operations running smoothly. In such a situation, Working Capital Loan can solve your cash flow problems. This loan helps you pay off expenses and raise funds.

Working capital loan interest rate is nominal and cost-effective for small and medium enterprises. These loans come with a line of credit facility that lets you withdraw cash as and when you need it. It also allows you to pay the principal at the end of the tenor so that you have one less thing to worry about.

Also Read: Working Capital Loans And What You Should Know About Them