FINANCE, INVESTING - HANDY HINTS & TIPS
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It is every bit as important as your business’s ability to deliver its goods and services. Consider this- if you fail to satisfy a customer and lose that customer’s business, you can always work harder to please the next customer. But if you fail to have enough cash to pay your suppliers, creditors, or your employees, you’re out of business!
Filling your cash flow gaps from time to time, almost every business experiences the need for more cash than it has. If you find yourself in this position, you may have to borrow money to fill the gap.
Understanding cash flow is the first step in effectively managing your cash flow. There is more to it than just a fancy term for the movement of money into and out of your business account.
Analysing your cash flow will help you identify some of the problem areas in the cash flow cycle of your business. You need to look individually at each of the important components that that make up the cash flow cycle, to determine if it’s a problem area or not.
No doubt about it, proper management of your cash flow is a very important step in making your business successful.
In summary, examining your cash inflows and outflows, and looking at the different components that have a direct effect on your cash flow, allows you to answer the following questions:-
If you can answer these questions, you are managing your cash flow.
Courtesy - Westlink Finance
Orange, Central West NSW
MANAGING YOUR CASH FLOW:
- a Healthy cash flow is an essential part of any successful business. Understanding cash flow is the first step in effectively managing your cash flow.
A cash flow budget is a good way of predicting your business’s cash flow for the next month, 6 months, next year or longer.
Improving your cash flow will, without a doubt, make your business more successful. Making sure that your debtors are collected within time or better and creditors are paid when due and not before hand, are key factors.
Handling any cash surplus is just as important as the management of money into and out of your cash flow cycle. With the proper management of your cash flow, you might find yourself with extra cash on which you can earn investment income.
- How much cash does my business have?
- How much cash does my business need to operate and when is it needed?
- Where does my business get its cash and spend its cash?
- How do my income and expenses affect the amount of cash I need to expand my business?
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