Your cash flow is supposed to grow alongside your business. Otherwise, you must rethink your approach. Maintaining cash flow can be a challenge to a growing company. You might need to overstretch your company’s resources if your cash flow does not match your growth aspirations. Thankfully, you can avoid this issue when you manage your cash flow properly and turn to accounting advisors for help. Here are tips to help you manage the cash flow of your startup:
Invest in Real-Time Accounting
Usually, you don’t just know your numbers. You must also have accurate and up-to-date numbers. If you have fresh financial data on hand, you can make informed decisions that positively affect your cash flow. However, entering such data into a spreadsheet every day or every week can leave you behind in the game. By investing in cloud accounting, you can access real-time data and experience a significant boost in your confidence when making decisions.
Manage Expenses Properly
Growing your cash flow is not only about increasing sales but also about cutting down expenses. Reputable accounting firms use cloud accounting software that can help you manage your business expenses effectively. This software offers a clear view of your financial activity. Running regular reports lets you identify surplus costs and business areas you can streamline.
Get Paid on Time
If your company is dealing with constant cash flow issues, you may want to clamp down on those who owe your business money. Keep in mind that you deserve to collect what you are owed promptly. Automated invoices and reminders in cloud accounting platforms can help you get paid on time. Letting customers build up huge balances will cripple your cash flow, so always collect on your terms.
Order Just What You Need
Over-ordered stock can cripple your ability to sell it due to a lack of money for activities like marketing and sales. You can overcome this by working out your lead time and order sufficient stock that satisfies a week’s worth of estimated sales. This means ordering more frequently, which may increase the unit cost and affects your margins.
While this is not ideal, you know that your margins increase when you sell more and cash is available for important business areas such as marketing and sales.
To effectively run your business, you need to be able to access up-to-date and accurate financial information. Also, your expenses should be streamlined and you can collect payments without delay. These affect the cash flow and growth potential of your startup.