You may be at the early stages of launching your startup or already have an established business; one thing stays true - you need to maintain a positive cash flow to ensure your long-term success.
To help you maintain good cash flow, your trusted financial adviser in Queensland shares some tips:
Keep Track of Your Ongoing Spending
You need to closely monitor the amount of money that goes out of your business on an ongoing basis. Sometimes, what you spend might make sense at the time, but it might not be worth it in the long run.
To help you, first, try to keep track of all the money you spend, including the money you have to pay for your employees, your rent, and your regular expenses.
Watch Your Big Purchases
Yes, you need to make big purchases, whether it has a massive impact on your business or not. However, you need to make sure that these purchases bring greater profits in the near future.
For example, you need to buy a new warehouse if you expect a bigger production. You need to purchase new equipment if you plan to expand your business and increase your sales.
Do Not Make Unnecessary Purchases
Sometimes, you might just want to indulge yourself or give your employees a bigger bonus. However, these are things you can do without. If you're going to reward your employees, maybe you can give them a bonus without increasing their salary.
Expensive company retreats, additional office equipment that you can rent, and unnecessary hiring are all things that you should avoid.
Reduce Interest and Late Fees
If you are not the "type" who likes to pay your bills immediately, you should keep them in check and avoid late fees and interest charges as much as possible.
You need to watch your payment due date and always make sure you do not miss any payments. You can also consider enrolling in automatic payments if you do not want to miss a payment.
Be Mindful of the Discounts You Offer
To keep cash flow positive, you need to track the discounts you offer your clients or customers.
You need to be careful with discounts because the more you offer, the more customers you will attract. However, the decrease in sales may not be worth the increase of customers.
You need to decide how many discounts are too much for your business. You need to know when your customers are abusing discounts to save money and when they genuinely appreciate your business.
Take Care of Your Receivables
If you want to maintain cash flow, you need to pay attention to your receivables, which are the money that your clients owe you.
You need to decide if you can add more collection efforts to your business. If you are not confident with your current collection efforts, you can always outsource to a third party to help you out.
Boost Cash Inflow
You will not be able to maintain a positive cash flow without increasing your cash inflow. This is the cash stream that you will get when you sell your products or deliver services. Your cash inflow needs to be greater than your cash outgo.
Good cash flow management can help your business avoid failure. If you fail to maintain good cash flow, you might get into financial difficulties, leading to drastic actions, including business failure. Proper cash flow management will ensure your business is sustainable for the long term. If you need help managing your cash flow, you can find a financial consultant who can guide you.
Swell Financial Planning offers the services of a seasoned financial adviser in Queensland. Contact us today and we’ll set a consultation appointment!