Managing your business’s cash flow is challenging at the best of times, let alone when renting prices, the cost of living, and inflation are all rising. We’ve put together the following guide consisting of five tips to help you understand the best way to manage your cash flow and keep your business’s financial health afloat.
- Take Deposits
As a small business, taking down payments is essential to ensure you’re not out of pocket while making your product or delivering your service. For example, if you run a restaurant with limited seating, make it so that reservations require a deposit, so you are covered in the case of any no-shows.
Or, if your business relies on invoices and transactions, create an incentive for your customers to pay sooner. You can do this by offering customers discounts for future orders when payments are sent promptly.
- Renegotiate Contracts
Economic uncertainty won’t only affect your business but will affect the entire supply chain you work with. Therefore, it’s a good time to check in with any suppliers and vendors to renegotiate contracts to potentially save money on both behalfs.
- Review Costs
Running a business will never be cheap, and many ongoing expenses will affect your overall cash flow. At times of uncertainty, it’s best to review each payment to gauge if it’s worth your business’s hard-earned money. For instance, is there a role you’re currently outsourcing that could be completed by an employee already on the payroll? Could you optimize your workspace to make it more cost-effective?
- Apply for Grants and Consider Loans in Hard Times
As a business owner, asking for help can be challenging, but it can be essential to maintaining a healthy cash flow that leads your company to succeed. Receiving a loan enables you to afford everyday business expenses more easily without dipping into your business’s profits and disrupting cash flow.
- Keep Forecasting Updated
It’s essential to have an accurate overview of the amount of cash your business needs to operate efficiently. This may change seasonally depending on your industry, but it’s likely every company forecast slightly changes when entering new periods. Keeping up with forecasting ensures you understand how your business performs financially and if any areas need to be taken care of.
For instance, if you’re about to enter a busy trading period, you’ll need to ensure you have the correct inventory levels to see your business through. Your expenses may be significantly higher to prepare for this, but the upcoming busy trading period should provide a profit that makes the expenditure worthwhile.
Regular check-ins and evaluations will help your business stay afloat, particularly when addressing financial uncertainty.
Need Support With Understanding Your Business Cash Flow? We Can Help
We understand how time-consuming handling company finances can be, so we offer various services to support businesses, including preparing cash flow plans. Contact us today to learn more.