The Top Five Things You Can Do to Have Better Cash Flow as a Business
- 04 Sep 2019
1. Pay bills only on the due date
This sounds pretty simple, but many business owners want more than anything to pay their bills in advance, so it is over and done with – but think about it. In theory, the longer you can hold onto your cash, the better for you. Resist the urge to settle your bills as early as possible and pay them only on their due date. This could work for you, unless, of course, you can negotiate an early payment discount from some vendors.
2. Pay off your entire credit card balance every month
If you have a business credit card or two, it can be tempting to settle only the minimum amount every month, especially if you want to have cash on-hand. But it’s best to settle your credit card balance in full every month because the interest can add up and have you paying more in the end.
3. Negotiate with suppliers and vendors
Another thing you can do is negotiate with suppliers and vendors when it comes to payment terms. Most business enterprises will have 30-day business terms, but if you negotiate, you may be able to have a 60-day term or even a 90-day one. It doesn’t hurt to ask, and if your request is granted, then you can have more cash on-hand for a longer time. This can also give you more flexibility when it comes to handling your other payables.
4. Have an incoming and outgoing budget
If you create an outgoing and incoming budget, this can go a long way as well – a fact confirmed by the skilled accountants from www.gsmaccountants.co.uk. It will help you take note of any fluctuations in your upcoming cash on hand, and it will then allow you to prepare yourself financially if there is any decline in your cash flow in the near future. Keep in mind that your incomings are almost guaranteed never to arrive on time, but if you schedule your expenses and have a good idea of incoming payments and your outgoings, you will have an easier time managing your cash flow.
5. Create projections for your cash flow
You should also take the time to create projections for your cash flow, and even though it may never be precise or accurate, you can still anticipate various scenarios and take the necessary steps before you have a cash flow issue on your hands. For instance, you can find out how your business will be affected if you lost X number of customers and the like. With a proper projection, you can have additional leverage in case of any unforeseen circumstances or situations.
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