Cash is the heart and soul of any business. The efficient running of a business is achievable through an uninterrupted cash flow. It is your duty as a business owner to keep a track of the cash flow of a business, apart from making a careful cash flow analysis. Availability of cash indicates the viability of the company. Check the amount of cash that you have in bank and draw a plan in advance of how many months you can handle with the cash in the bank.
Q. Are you facing problems with your cash flow?
Q. Despite profits, are you finding your cash position to be tight?
Here are some tips from Kuza Biashara, on how to keep track of cash flow:
Planning ahead is the key to the success of a business. A proper plan has to be developed in advance to understand the cash flow of a business and how to use that cash. Identify your peak and dull seasons. In your peak seasons, handle your cash carefully and save it for the dull or slow seasons. Keep aside money for salaries and bonus, in the last week of every month. Check for the remaining cash and use it accordingly. Avoid confusion and handle cash efficiently. Appoint skilled personnel with a thorough knowledge of accounts to design a plan for a year, for every quarter and for every month. An efficient plan will help you save your funds for the future.
Clearly mention the rules, terms and conditions of payments to your customers. If payments from your customers are delayed, it could lead to huge problems. Remind your customers that their payments are due and have to be paid on the due date. Discuss the payment conditions, with the customers before they sign the contract. Tell your customers that they will have to pay penalties if they do not pay within the stipulated time. Maintain receipts and invoice in a proper fashion. Retain receipts and invoice within the company and also give a copy to your customers. This will avoid confusion and loss of time and money.
Monitor your bank dues continuously to avoid penalties. Check with the banks regularly for different payment options. In case of any delay, work out with your bank to extend the due dates of payment. Assure them, in advance, that everything will be taken care of. Try to repay the loans as early as possible, and that will reduce the costs of penalties.
Maintain Account Books
Appoint skilled employees to maintain your account books. Maintenance of accounts is crucial for the running of any business and also to understand if you are running a profit or loss.
Managing cash flow is an art. Every business requires smooth and continuous cash flow. Cash flow management is what you need to know as an SME entrepreneur. It is essential that you track your cash and plan ahead. Planning ahead helps you face and solve problems like slow growth rate and emergency cash payments. A proper plan has to be developed in advance to understand the cash flow of a business and how to use that cash