Most business owners see growth as a solution to the cash flow problem. That is why they have ambitions to develop the business without knowing that the ambitions actually increase the cash flow problem. To prevent this from happening, plan and manage cash income and expenses using the services of an accountant at https://lokalerevisorer.dk/ who are experts in accounting and financial reports so that it does not “surprise” your business going forward.
Simply put, you only need to answer these two important questions:
- What is the condition of your business cash balance now?
- What do you expect from the value of the cash balance that will occur over the next 6 months?
If you cannot answer both of these questions, then your business cannot control Cash Flow properly. Following are practical steps to better manage Cash Flow, especially for growing businesses:
Sometimes, business uncollectible accounts can swell. And that is not effective for your business cash income. Ask customers to pre-authorize checks so that banks can withdraw cash from their accounts at predetermined time intervals. You can also use the Invoice Reminder feature from your accountant to remind customers about paying off receivables automatically. You can also try offering a discount to customers if they pay the bill before it’s due.
Set Tighter Credit Requirements
Businesses often have to provide credit sales facilities to customers. However, you must first research to determine the risk of giving credit to each customer. Can they pay their bills on time? Is their business in bad condition? Are they having Cash Flow problems? Sort customers who are often late in paying off debts and provide more stringent credit rules so that they immediately pay off debt.
Increase in Sales
If you need more income, there is no other reason to try to attract new customers or sell new products and increase the number of sales to your regular customers. And maybe this is difficult to realize. Getting new customers is very important for a growing business. However, it requires a lot of time and energy.
Selling more products to repeat customers might be easier than getting new customers. And you might be able to do this by analyzing which products attract most of your repeat customers. This information is expected to increase profit margins and generate more cash inflows. However, you must be careful when increasing sales on credit. At the very least, you must have a limit regarding the credit sales value facility that you will provide to customers.
One option to increase Cash Flow is to offer discounts to your customers if they can pay off purchases early. Although this practice can affect your profit margins, it can help your Cash Flow management by giving customers incentives to make payments early. This can also shorten the receivables collection cycle.
It is important to keep Cash Flow under control. As much as possible, do analysis and evaluation of the movement of Cash Flow every month. So that your business stays on the right track and can consistently generate Positive Cash Flow.