Any business, to run successfully, needs continuous cash flow. Money is the most important element you require to start and continue a business. Without money one cannot reinvest and earn more profits. All businesses need continuous cash flow. A one-time investment is not the end of investing in an idea, it’s just the beginning. Beyond investment, what is more important is the maintenance of cash flow records. These records help you get a fair idea of where you are spending and how much you earn, etc.
Q. Don’t you know how to maintain cash flow records?
Q. Are your records incomplete?
Here are some tips from Kuza Biashara, on how to maintain cash flow records for your business:
Payments receivable and payable
Make a note of the payments you receive and the ones you have to make. These are the most important cash records that you require, to see where you stand. Clearly maintain these records without any confusion. Appoint a responsible employee to maintain these records. Do not mix cash statements of your customers. Every bill should have the name of your customer to avoid confusion. Retain receipts of the bill and invoice with the customers and also in your company. Check the records regularly and make the required changes once your customers make payments. Update the list of your payable payments.
It is a good deal to use certain software’s that are available to maintain your cash records. The old practices of using books to write accounts is still there, but softwares help you do the same with lesser effort while they also help in calculating cash flows. Write down every single detail of your expenditure in your records. Make columns for every little thing. These columns can include your expenses, income, salaries, debts, etc. Always have backup of the data you save on the computer. Save your data on to USB and other hard drives as backup. Computers can get affected with viruses, so backup of your cash flow accounts and statements is a must.
Set terms of payment
Prepare your terms of payment beforehand. Clearly mention your terms and conditions to your customers. These terms will help your customers make the payments within the promised time. Strict rules will help your customers stay cautious. Remind your customers every time before a payment is due.
Maintenance of bills
Maintain the bills and invoice statements regularly. Check the bills; maintain separate folders of bills paid and bills to be paid. Make a note of the discounts you offer your customers. Once you promise a discount, write clearly on the bill or invoice statements the discount offered. Prepare the bill accordingly to avoid confusion.
Maintenance of cash flow records is the most important element in a business. At the same time cash flow management is a skill you need to cultivate along with the ability for a careful cash flow analysis. Unless and until you do not maintain your cash flow records, you may not know what’s happening in the company. These records help you figure out where you stand and where you need to improve. It is the easiest tool to show you where to cut down your expenses. Never delay maintenance of cash flow records. Always update your records to avoid confusions as it can lead to major problems.