Your ability to properly
manage cash in your business
is a reflection of how stable your company is. Cash flow is the
lifeblood of any business; it is an important means for you to keep the
organization running. You use it to pay salaries, buy supplies from
vendors, and build infrastructure. Startup companies that do not have
the ability to properly handle their cash flow and reserves are almost
certain to fail, while those with the know-how have a better chance of
succeeding.
Boosting your cash flow involves quickly converting sales into cash
while finding ways to reduce or extend payments, which are the basic
foundations for long-term, sustainable growth of your company.
Here are a few suggestions to help you manage your cash efficiently.
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Keep accurate, timely accounting records
You know how important it is for you to have a solid understanding of
your business’s financial standing, and keeping timely accounting
records is the first step. Having the latest statements on hand will let
you know in advance if there are shortages in your cash flow, which
will in turn give you adequate time to make the necessary preparations.
You then have the ability to anticipate needs and act in a timely manner
before you lose any more cash.
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Establish a bi-monthly cycle for your payroll account
Set up a separate payroll account, and put it in a bi-monthly cycle
instead of a bi-weekly cycle. A bi-monthly payroll system requires only
24 cycles as opposed to the 26 cycles that a bi-weekly system has.
Having less cycles means that there’s less administrative costs allotted
for collecting, verifying, and tabulating payroll information.
Additionally, you might want to instruct your employees to take direct
deposits to eliminate the cost of writing and delivering checks.
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Set up a policy for delinquent payers
For small businesses, the ideal scenario is to collect payment before
or immediately after a client purchases an item. But this is not always
the case, especially if payment policies were not clearly communicated
with customers. To avoid payment delays, set expectations from the
outset by putting a notation that says, “payment is expected on invoice
receipt.” Make it clear that waiting longer than 30 days to receive
payment will have a corresponding interest charge. Provide potential
delinquent payers with alternative payment options like credit card
payments or specific payment plans.
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Consider outsourcing key functions to experts
If you don’t have the inclination nor the patience to keep timely records of your cash flow or to manage your cash personally,
outsourcing these functions to professionals
is a great option for you. This way, you can focus on making decisions
for your business or handling other functions that you are more adept
at. You can also get expert advice and leverage on their experience in
the industry. These are valuable insights that you can get, especially
in specialized areas like taxation or bookkeeping.
Following these basic tips for efficiently handling cash provides you
with better opportunities and more flexibility while giving you the
peace of mind of knowing that you’re on top of your company’s money
affairs.
Small businesses are making their ways into the commerce through some
trials and errors along the journey. While budget is somehow limited
among them, know that our services are reasonably priced, ensuring that
you can reach your goals. Outsource your needed facilities and we’ll
gladly assist you with all your concerns.
Learn more!
