Stressing over your business’ cash flow? Worried that your finances might not be enough in the long run?
Money makes the world go round. This saying rings true especially for business owners. From covering the bills, making payroll, and paying your taxes – money is essential.
We’ve gathered some tips you can use to improve your cash flow problems.
1. Keep your eye on your budget
Assessing your budget is the start to solving your cash flow problems.
Analyze your cash flow patterns to identify trends. This is pretty similar to assessing the weather – it prepares you for what’s coming next.
Keep documents detailing your income and outgoings. This is called a cash flow forecast, and it helps you see whether you have a surplus or deficit cash.
Cutting down costs is also another way to go. Identify waste and unnecessary materials you can scrap, such as expensive packaging or spare offices.
2. Set up a line of credit
Having a line of credit saves you from the stress of not having enough money to spend.
The idea is that you have a safety net during the low times, but you can pay it back during better seasons.
With a line of credit, you will only pay what you used and some interest. Once you’ve paid it all off, it will be available next time you need one.
3. Speed up payment terms
With a slow cash flow, you might need money sooner to attend to your financial needs. Your business might offer one- or two-month payment terms, which is not as helpful in improving cash flow.
Consider offering incentives to your clients with early payments. Some ideas include discounts, gift certificates, or free merchandise.
4. Slow down on your cash outflows
On the other hand, you should delay cash outflows. While accounts receivables (payment from clients) should be sped up, accounts payables (paying suppliers) should be slowed down.
Always check and negotiate with vendors to give you longer payment terms, or even discounts. Stretching out your payables help with preventing short-term cash shortage.
5. Lease, do not buy
Leasing is another tactic for reducing overhead expenses.
With some business owners, equipment can be too pricey for their budget. Machines can quickly eat up your cash reserves, since there’s also maintenance and repairs to think of.
The smarter move is leasing equipment first.
6. Raise your prices
Raising your prices can be a shocking move. However, according to this study, 42% of consumers would welcome a price increase if it meant improved experience.
Raising your prices is a bold, risky move. You can start by testing the waters and see its effect on your sales before fully diving into this tactic.
7. Hire an expert
Money is a sensitive part in business. One wrong step could land you in a sticky situation, and it is one that all business owners hope they’d never experience. Handling taxes is one great example – making mistakes could land you in a tax audit.
Hiring an expert puts you at ease. Here are some reasons why you need one for your business.
These tips may seem simple, but they are actually complex. Meticulous analysis of your business’ financial data, such as the details of your payroll, tax management, property tax and so on, is not as easy as it seems.
That is why we, at Savvi Accounting and Shared Services, have a team of certified public accountants as well as accountants who are Xero certified. With this, you can be assured that you are working with the best in the industry and that your business is in good hands.
These are just some of the reasons why you need to hire your accounting team. If you want to get started with it, talk to our accounting expert today at +63917-174-7277. You may also send us your inquiry or ask a free service quotation at email@example.com.
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