Tips on How to Improve Cash Flow Management

Cash flow is the money that comes in and out of the company. Your business needs to manage its cash flow properly to ensure you have enough to pay for the ongoing expenses, such as employees' salary and office rent, and invest, upgrade, or purchase assets. Negative cash means that your expenses are more than the amount you generate. If this continues, the company could end up in bankruptcy. Here are tips on how to improve your cash flow management.

Invoice immediately

Every payment that customers make adds to the cash flow. However, they cannot pay if you don't send their invoice. Even if there is a set payment date, practise invoicing as soon as the service is done. Some customers pay immediately after receiving the invoice, even if it's not yet their due date. Furthermore, you may offer something to those who pay early to encourage them to do this, such as a discount. Of course, it should still be profitable. You don't want to offer a huge discount to be paid early but be on the losing end profit-wise.

Accounting software will let you easily do this. You can outsource the accounting job if you don't have software or in-house accountants. Some London-based accountants offer outsourcing services. They can effectively manage your cash flow and all your other accounting needs. These professionals are experienced and equipped with the latest accounting software, ensuring quick, accurate, and efficient work. They also have a backup, so you don't have to worry about data loss.

Negotiate the due dates of your payables

To ensure you have positive cash flow, talk to the companies or people you deal with, like your suppliers, to move the due date of paying them to something convenient for you. For example, if you pay several payments scheduled on the same day and only expect a few payments from customers, you could have a negative cash flow. But moving other payables to different dates could solve the problem.

Discuss discounts with your suppliers

Besides negotiating the due date, you can also discuss discounts with your suppliers. Ask if you can get any discount for paying early. If you order in bulk, they may also be able to adjust the price. You may also team up with other businesses in purchasing items, so you can get them at wholesale price.

Check inventory regularly

Inventory management is one of the important things you need to do in your business, significantly affecting your cash flow. Being on top of your inventory lets you know which items to purchase and the quantity. Overstocking means spending more than you need now, which unnecessarily increases your outgoing amount. On the other hand, not having enough stocks can also affect the cash flow negatively because it prevents you from making sales. So, ensure that you have the right amount of stock to meet your customers' needs while maintaining a healthy cash flow.

Regularly reassess your business operation to find better ways to increase the amount of money that comes in and eliminate needless expenses.