10 Steps to Manage Your Cash flow

10 Steps to Manage Your Cash flow

1. Set cash flow targets.

One way of controlling cash flow is by preparing and maintaining a cash flow forecast. Karish Kapital advises that this forecast should be updated weekly, to provide an accurate outlook for the next six to twelve months. Setting targets ensures you will pay attention to cash flow management. It is great to hit and beat those cash flow targets!

2. Agree clear payment terms.

Establishing clear payment terms is critical.  If you don't start off knowing what your payment terms are, it is difficult to know when you are going to get paid. If you don't know when a payment is overdue, how are you going to manage your cash flow?

3. Invoice quickly.

Some factors that influence cash flow are in a business's own hands, including when to invoice. Get into the habit of invoicing clients as soon as the work is completed. Issuing your invoice by email will mean it will get there immediately and you will have a record of it being sent. It will also be easier to follow-up if the payment does not come.

4. Make payments easy for customers.

Making payments should be made as easy as possible for your customer. Try to avoid being paid by cheque as it will result in delays before the money arrives in your bank account. Online payments are a much better option!

5. Offer clients fixed rate payment packages.

One way SMEs can help ensure good cash flow is by offering periodic payment packages. An hourly rate, which many businesses traditionally use, offers no way of predicting income from month to month. Consider a retainer package for a fixed number of hours each month, which are billed in advance. This way, you get paid up front rather than in arrears, and you can plan spending and business growth more easily. The peace of mind this gives is priceless.

6. Establishing payment arrangement.

Every business experiences a gap between invoicing and payment, but these can be minimized. Establish direct debit for collecting receipts. You will then be able to scale your business without increasing the costs required to collect debts. The result will be establishing a stable inflow of cash from which all payments can be made from. It's a no-brainer to go onto direct debit.

7. Use technology to manage cash flow.

Technology can make it much easier to manage cash flow.  Cloud-based accounting is the biggest time-saver, allowing owner/operators to work more effectively, free up time, and keep better track of cash flow. With these systems in place you can now view your accounts on the move via a laptop, tablet or mobile phone and keep up to date with your financial situation. The convenience of having reliable accounting cloud-based software and advice available 24/7 is a real key.

8. Do not focus on profit, focus on cash flow.

If your cash flow is in order, your profit will be in order. A lot of businesses do not make it past six months. They might have been a profitable business eventually, but they need to have good cash flow to survive. Also, it is important to look at your payment terms. Don't be blinded by profit margins.

9. You can leverage your cash flow.

Karish Kapital provides a viable alternative to help owner/operators and entrepreneurs leverage their well-managed cash flows via - the merchant cash advance. A simple, proven concept, merchant cash advances are based on a percentage of future receivables which provide immediate working cash for businesses.

We offer a revolutionary new working capital program designed to help you manage your cash needs by providing you with a faster alternative to traditional bank lending. Find out more at http://bit.ly/1E4pj4n.