Effective Strategies for Managing Your Cash Flow

Our Weekly Tip: 4 Strategies for Managing Cash Flow

Cash flow refers to the movement of money in and out of your business. Positive cash flow is when more money is coming in than going out, and negative cash flow is when more money is going out than is coming in. Pretty simple, right? The thing is, even if your business is generating a profit, it doesn’t necessarily mean that your cash flow is being properly managed.

In the current shifting economic climate that we find ourselves in, ensuring a reliable, positive cash flow is more important than ever. Let’s take a look at some strategies for how to do that.

Strategy #1: Monitor your cash flow closely

Just like an important part of a healthy lifestyle is going to the doctor to get a checkup and detect problems early, paying close attention to your business’s cash flow is key to a healthy operation. And just like going to the doctor, you don’t want to put off doing this. Regularly look at your expenses, revenue, loans, accounts receivable, and accounts payable. Generate cash flow statements and use projections to see where your business is headed.

Strategy #2: Stay on top of bookkeeping

Making sure the numbers line up is not something to do right before tax season starts. As we preach here, getting your books in order throughout the year is not only critical to optimizing your tax bill, but it’s also crucial for maintaining healthy cash flow. The more accurate your books, the better able you are to identify issues before they become large and costly problems.

Strategy #3: Use credit over cash

Many small businesses operate on a very tight budget, especially new ones. Credit cards provide a line of credit that can be used to buy anything you need for your company, even if you are temporarily short on funds. This will help even out your cash flow, and make you less susceptible to short term ups and downs.

Strategy #4: Speed up your accounts receivable

Send out your invoices quickly. As soon as the work has been completed, small businesses should be invoicing their clients. Whether you’re waiting on invoice payments from clients or deposits from payment processors, the faster you get money in your pocket, the more cash flow you’ll have. On the flip side of that, process invoices that you receive on the accounts payable side as soon as you receive them. That way, your accounts payable will accurately reflect the money that you owe to vendors.

Get Your House in Order

With inflation continuing and the economy slowing, we may be entering uncertain times. The best thing you can do now is to ensure your cash flow is strong. Now is the time to take a close look at your books, examine all your expenses, establish credit with vendors, and look for ways to maximize cash inflows.

The strategies we listed above are just a start. If you have about how you actually can optimize and correctly manage your cash flow, you’re in the right place. Click here to schedule a call with me .?

_________________________________________________________________________

We Provide Comprehensive Business Accounting Services

When it comes to managing your cash flow and business finances, sometimes it’s best to leave it to the professionals. After all, you have your actual business to run, employees to manage, and customers to serve.

By hiring us to handle your office you can focus on your specialty, regardless of the industry you are in. You can rest assured that:

·??You are staying within budget

·??Outstanding invoices are taken care of

·??Your employees are being paid on time

·??You’ll understand your cash flow

·??The business will be on the best footing possible for success

We help take some of your burdens off of your shoulders, so you can leave the stress and headaches behind!

?Start Managing Your Business Finances Better

__________________________________________________________________________

Tune In to Our Weekly CFO Scoop

I’m excited to announce that I will be doing weekly LinkedIn Lives every Wednesday! Tune in for tips, insights, and best practices around business growth, tax optimization, developing an abundance mindset, and more. Leave us a comment to let us know what topics you’d like to see covered in these weekly lives!