How to manage daily cash flow for your small business (SMB)
There is no rocket science to understand that whether it is about beginning a small business or maintaining a successful business, you need a great and smooth running cash flow. If you have to survive your small business physically you know how important cash flow becomes in order to run a daily business activities.
Now, to be very specific cash flow management means that you, as a small business company try to delay the payments you need to make and increase the pace of the money that needs to be paid to you. This does not at all means that you’re not paying your bills and just clearing the bills you had given to the other people. No! This means you have to be balanced, yet be smart when it comes to running a business.
No business will be able to run successfully and stress-free without maintaining a balance between the outflow and inflows. You have to be careful when it comes to paying the company bills and the bills to be paid to you. At the end what stands is proper management.
Don’t be afraid of these facts, these might sound very frightening but aren’t at all if you manage them smartly taking the help of some basic technology. Yes, we are speaking about the online business tools available, which makes the tedious and at the same time hefty jobs easy and manageable.
So, below is the rundown of the ways you can always manage your cash flow using online tools:
1.Measure the Cash Flow
You should always be aware of the flow projections and the amount of cash flow that would be available of for the next year. And if not a long term analysis, pick up to small term goals like — weekly cash flow projections. This will not just help you be aware of the cash flow but also you will have a clearer picture of the money and you will be alert to each detail especially when the trouble strikes.
Now, there is a need to understand that these cash flow projections are not at all the glimpses into the future, they are mere guesses which are measured and thereafter made.
You may search for uncountable situations to be questioned, but all the situations or cases will lead you to the same one, which says, “How much cash in the form of customer payments, interest earnings, service fees, partial collections of bad debts, and other sources are we going to get in, and when?”
Moving on, you must be aware of not just how much money is coming from where, but also where are you spending that money.
2. Improving Receivables
Ideally, the trick lies when you clear your payable as soon as you have made them. However, this stands as an ideal situation, and no one is able to do so. However, if done, none of the company would have a cash flow issue. Therefore, experts have been suggesting on improving and working upon the pace, where you, as the company owner has to look into to turn the raw materials into final products, the inventory into receivables, and thereafter receivables into cash. Below we provide you a few tricks to do the same:
● Offering discounts as an attraction, especially to the customers who have been or are paying their bills on time
● Asking customers to make the online payments as soon as the product/services reach them
● Get rid of the old inventory
● Issue the invoices religiously, and start taking a follow if the invoices are not getting cleared
● Practicing the policy of online payments instead of “Cash On Delivery” or not making any relation with the customers who are slow at clearing their invoices, this harms your business
Now to practice the same, you have various online tool solutions available, which you can download or practice. Online payments make the payment gateway simple, easy, and instant.
3. Surviving the Cash flow shortcomings
There will come a point of time during your business when you will find yourself in a situation where you do not have the required cash to pay your bills. Firstly, at this point of time stop considering yourself a failed businessman or a failure. There are several businessmen who go through the same situation and are unable to predict the future.
● There are normal day-to-day practices which you can imbibe and run your business smoothly.
● Maintain an online document which updates frequently, use the help of online documents, or toolkits available, which will make your life much easier than the pen and paper bills which get lost frequently.
● Keeping things on mail like invoices, and payment details while sending them to the clients will make sure that they do not use the excuse of “invoice getting lost”, or “Did not receive the invoice” excuses.
The essential element to managing the shortfalls of cash is to become aware of the issue as early and as precisely as possible. You might consider taking a load from the bank, or you might have already taken one.
Meanwhile, if the bank comes to know that you have failed in maintaining the cash flow and its because of the lack of a well-executed plan, they too would hesitate in providing you with any kind of help.
These were the basic three elements which you are an entrepreneur should follow in order to pay the customers daily or get paid by the customers daily. As by now you must be aware if you do not get paid smoothly, it will be difficult to pay the customers daily. Therefore, while you look into details or practice proper cash flow management keep in mind the above-mentioned tricks, there are easy to understand, however, businessman considers it difficult to practice.