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Positive cash flow is significant to a growing business because it has the power to influence business sustainability. A rapidly growing, profitable business needs to consistently work on ways to increase the cash flow alongside maintaining the growth momentum. Even seemingly minor matters such as an invoice payable to a supplier being due before an incoming payment is recovered from a client can lead to imbalance of cash flow. Effective cash flow planning is a mix of judicious business practices as well as sound accounting and bookkeeping, thus ensuring the business stays sustainable even in critical times.
Our accounting experts suggest the following ways to increase business cash flow:
Sending invoices on time is important in ensuring debt stays in control. Using accounting and bookkeeping software is invaluable in assisting with timeliness.
Inefficient processes can hinder business growth and eat into revenue. On the other hand, the use of streamlined business processes almost immediately reflects a positive trend in terms of enhanced accuracy, improved reliability, and increased efficiency and productivity. Mapped over a period of time, streamlined processes help businesses add to the bottom line by enabling faster processing with reduced errors. Streamlining can be done with the help of installing the right software, or better still, by outsourcing to professionals. Outsourcing correctly can help a business save as much as 40% compared to completing the work in-house.
Small businesses shouldn’t invest funds in buying capital equipment. Instead, outsource infrastructure implementation, saving on immediate expenses. Once implemented, infrastructure needs periodic repair and maintenance, which is also expensive.
The same logic applies to technology. It can be difficult to resist the urge to purchase new technology when you need it. However, technology needs regular upkeep and updates which can eat into cash reserves of a growing business. When outsourced, technology and infrastructure maintenance are neither difficult to implement nor a high cost to the business, thus eliminating steep investments in a zone that faces continuous depreciation of value.
Vendors may offer discounts, or some deductions on a bill payment, in exchange for early or full payment. This can work to the advantage of a business, especially if there are high volumes of payment to be made. If needed, billing cycles can be worked around and modified to ensure your cash flow balance is not upset. For example, if your business logs in higher sale around Christmas time but your billing cycle is initiated in December, change it to make payments post-Christmas so your cash flow stays balanced.
These are some steps businesses can implement to optimize cash flow. At Analytix Solutions, we provide our clients with customized accounting and bookkeeping. Our accounting services are comprehensive and include processes as well as insights that can help your business perform measurably well.
If you are running your own business, we want to hear from you! Let us know in the comments section below how you manage your own business cash flow and some strategies you implement to increase and improve it.
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