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 – or for that matter, even start a business. All businesses need continuous flow of cash. 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 have to receive and the ones you have to make. These are the most important cash records that you require, to see where you stand. Maintain these records clearly without any confusion. Appoint a responsible and knowledgeable employee to maintain these records. Every bill should have the name of your customer to avoid confusion. Give receipts of the bill and invoice to the customers and and retain a copy in your company. Check the records regularly and update them once your customers make payments.
It is a good idea to use software that is available to maintain your cash records. The old practice of using books to maintain accounts is becoming obsolete. Use the modern software to help you maintain with lesser effort. Always have backup of your data on the computer. Save your data to USB or other hard drives as backup. Computers can get affected with viruses, so backup of your cash flow accounts and statements is a must.
Maintenance of bills
Maintain a statement of bills and invoice regularly. Check the bills and maintain separate folders for bills paid and bills yet 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 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. Always update your records to avoid confusions as it can lead to major problems.