The four pillars of successful cash flow management
All good business owners know that cash is king. But, with so many different factors impacting on your cash flow, it can be challenging to successfully manage.
These four pillars of cash flow management are critical for business success.
They provide the foundation for you to successfully manage your money and reach your true potential.
Are your pillars in place? Or are there gaps that need to be addressed?
Maintaining a healthy cash flow can be difficult if you don’t know all of your incomings and outgoings.
Through effective planning, budgeting and forecasting you can be aware of any upcoming shortfalls and take action to protect your position.
Without this knowledge you could end up spending more than you can afford and not being able to meet your other commitments. It’s a slippery slope from there.
For more tips on planning take a look at this guide to cash flow forecasting.
Many businesses rely on external funding to bridge cash flow gaps and provide the necessary working capital to meet their goals.
However, it’s important to ensure that the funding you have in place meets your evolving business needs.
Whilst some options will just provide a short-term cash flow boost others will support your business in the long term, giving you the freedom and flexibility to grow your business.
So, always make sure you research your options and find the most suitable product and provider for your needs.
A good starting point could be reading this guide to business finance products.
Effective credit control is a vital component of any business that trades on credit terms.
Without money coming in on time, cash flow can be severely affected and the associated problems can escalate quickly.
Implementing an effective credit management strategy will ensure you get paid on time, every time.
And for the occasions when your customers don’t pay it’s important to take action quickly to safeguard your cash flow.
For further information take a look at this post on how to get your invoices paid faster.
The processes behind your cash flow management are vital. Whilst many small businesses still rely on Excel spreadsheets for their budgeting, forecasting and credit control needs, this could be holding them back.
In recent years advances in technology have developed new ways for businesses to run these processes, improving efficiency, reducing the time it takes and often improving results too.
Therefore, it’s always worth exploring what software is available for your business and its budget to see if you could save vital time and resources too.
You might also find this post on how to spot a cash flow shortage before it happens useful.
We hope these four pillars of cash flow management help you to successfully manage your money.
If cash flow is restricting your growth, as a commercial finance broker we may be able to help source a suitable finance facility to allow you to reach your potential. Contact us on 0800 9774833 or firstname.lastname@example.org to discuss your requirements.