Proven ways to manage your cash flow

Is your business grappling with Cash Flow problems? If you answered " YES ', then you're at the right place. You're not alone. Follow us as we unfold the Reasons, WHY? and proffer some basic solutions to this nagging problem.

Cash flow issue in businesses has been very tricky.
It is a pervasive global phenomenon that has plagued corporate organizations and small/ medium businesses alike.

So what exactly is Cash Flow?, the financial media website defines Cash flow as “
… the net amount of cash and cash equivalents being transferred in and out of a company. Cash received represents inflows, while money spent represents outflows”

And it is trite, that a business entity or a company’s ability to create value for their stake/shareholders is fundamentally hinged on their ability to generate positive cash flows
This guarantees long-term free cash flow, for the day-to-day running of the company or business.

But managing cash flow is one of the biggest challenges business owners face. Therefore, proper cash flow management is a key strategy that every business owner must master for long-term financial success.

So, How Do You Manage Your Cash Flow and grow your business.?

Listed below are a few strategies to employ when you encounter cash flow problems in your business.

These are by no means exhaustive.

(1) The business owner or his representative should update their knowledge in basic Accounting, no matter how little it may be.

This will enable proper monitoring and understanding of the BOOKS and cash flow charts.

(2) Send Invoices Promptly

One key reason cash flow is essential for your business is that it enables you to distinguish between invoices you’ve sent out and invoices that have been paid.

Any invoices raised mean little if you don’t have that money on hand to cover expenses. The more reason why invoices should be raised early enough.
Do you have a homegrown process in place to chase late payments?

(3) An important aspect of mastering your cash flow is to constantly monitor it.
It is crucial to know how much money your company is receiving, compared to how much of that money is available for use.

Use Technology to your advantage. Your business should leverage emerging technological advances and artificial intelligence-enabled solutions, which come as apps and software updates.

These surely streamline business processes and increase efficiency.

Key areas to target are budgeting and cash flow.

(4) Also employ automated payment methods with your clients to ensure getting paid is stress-free. With this in place, you spend less time chasing invoices and freeing time to run your business cash flow effectively.
To buttress this point, this is what an expert has to say:

“When you can see all accounts payable and accounts receivable, plus the other financial intricacies of your business, in one spreadsheet, you can budget and easily project future cash flow,”

5 Take a long hard look at your inventory and sell off items that aren’t selling well at a discounted price.

6 Review Your Business operations.

Appraise your cost structure to overhaul efficiency gaps and implementations that should be modified to increase savings i.e operations and services that must be outsourced to freelancers e t c. The benefit here is, you get the job done without providing salary and benefits

7 Take a Loan and Monitor your cash outflow.

Borrowing money or taking a loan can be a temporary fix until your business is stable and healthy enough to stand on its own.
However, the loan must be monitored to ensure it is judiciously utilized for the purpose for which it was obtained.

In conclusion, Cash flow is the movement of money in and out of a company or business entity

Cash received is termed, inflows and cash spent is termed, outflows.

Experience has shown that for any business setup to have a healthy cash flow, implementing the strategies above and discipline from the stakeholders/ owner, can revive a struggling business and restore a positive cash flow.

Charles Ajeigbe

Charles Ajeigbe

Director Business Development/Lead Consultant

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