Your cash flow is the money you have coming in from revenue and going out for expenses.
Being able to effectively manage this is key to the long-term survival of your business.
Your cash flow impacts on your future spending decisions and the direction your business is likely to take. So, keeping your finger on the pulse at all times can help ensure you are making the right decisions.
Here are a few handy tips to help you maintain and manage your cash flow.
- Have a properly structured balance sheet that has all the details, from inventory and debts to interest costs, and know it back to front. This is vital in managing cash flow and budgeting.
- Work with your accountant to learn how to manage cash flow in your business. Depending on your specific situation they may recommend doing cash flow budgeting on a weekly, monthly or quarterly basis, and advise you on a range of issues including which invoices you should pay and who will pay you.
- Keep your working capital and business bank account separate from your personal bank account and draw a wage or salary for yourself rather then drawing on your business account for personal expenses when needed.
- Reduce the cash going out of your business by revising outgoing expenses, inventory and staffing levels to determine whether you can make some savings.
- Practice good stock control by modifying the quantity and timing of your stock purchases to coincide with higher cash flow periods. Do regular inventory reviews and only hold the stock required to run your business efficiently.
- Create a cash reserve. This will give you the confidence and finances you need to grow your business and help you prepare for any unexpected expenses.
- Raise capital through your existing business assets to generate cashflow, whilst providing taxation benefits. This may also provide cash flow during unpredictable and seasonal periods. By entering a Sale and Leaseback financial arrangement, your business sells their equipment to a financier who then immediately leases this equipment back to your own business, generally over a 3 to 5 year term.
Having adequate working capital at all times is really important, and managing this capital carefully is critical.
If your business is looking to generate working capital, Morris Finance can raise funds from a number of commercial goods. By offering a range of commercial products to provide cash flow for your business, our team of finance specialists can provide you with information and access to financial solutions that will allow you to grow your business. Contact us today on 03 5223 3453 to discuss your options.
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