How to Manage Your Company Cash Flow

Cash flow is money moving in and out of a company.  Incoming cash refers to revenue or external funding and outgoing cash are your expenses, such as stock purchases and wages.

Knowing what is coming in and going out of your business enables you to:

• Assess financial health
• Make informed decisions regarding spending
• Plan for the future

There are several tools available for managing cash flow through accurate bookkeeping, with most now being digital and a large number being online.

The emergence of solutions such as QuickBooks, XERO and Sage have made it easier to keep on top of this task, providing you use the software consistently.

It is relatively straightforward to generate cash flow statements using accounting software, and these statements will give you a clear picture of your status.

If you are not confident with carrying out your own bookkeeping and accounting, then it may be better for you to hire a professional.

Invoicing your customers on time and chasing unpaid invoices can be time consuming and a chore. But without keeping on top of this task your cash flow will suffer.

As much as a third of payments to small businesses are commonly late, which can have a massive effect on your business. Many companies look to invoice finance when late payments become troublesome.

Having money in the pot is very important. It can help with covering unpaid invoices, allow you to buy additional stock that may be on offer or cover unexpected expenses.

Having cash to fall back on helps keep you in business during lean or difficult times. For businesses with little or no cash reserves, using working capital finance can be a good option. There are many options for cash flow finance with traditional banks and alternative lenders offering these business loan products.

Profit is important for any business, but all businesses need consistent cash flow to survive. Cash is King.  Holding out for large profits that do not come often enough, without adequate cash in the business will often result in business failure.

Many businesses will reduce prices on surplus or under performing stock to increase income.

Knowing your price point and breakeven point will allow you to use adaptive pricing to ensure cash keep flowing into your business without operating at a loss.

Some business owners use the same bank account for personal and business use, this can be problematic.  When it comes to proper cash flow management and accounts, you need to know exactly what cash and payments are personal or business related.

It is a good idea to have separate accounts to make the separation of business and personal cash simple.

Whatever your business size, effective cash flow management is key.  For a business to be financially stable and a success, you need to know exactly how much cash is coming in and going out at all times.