A FEW SIMPLE STEPS TO ENSURE POSITIVE CASH FLOW
A positive cash flow is the cash flow that you need. It basically means that the amount of cash coming into your business exceeds the cash that is going out as expenses. Maintaining a positive cash flow one of the most important aspect to maintain any kind of business over a period of time. It has been observed that nearly 82% of small businesses fail due to mismanagement of their cash flow.
One of the primary truths about incoming cash flow is that, it’s not all profit. It includes covering the cost price of the product/service, paying wages and many other liabilities. Therefore, having a skilled accountant by your side is not just necessary, it is critical to ensuring long term success and growth. If your business has been running successfully for a decent amount of time, it will be evident that the cash flow has been carefully calibrated and is constantly monitored by staff in-house or external accountants.
The real issue arises for small and medium businesses that are just starting out. We managed to put together a short list of checkpoints that are generally evaluated to understand the company’s position.
- Is your business able to secure a profit?
- Are you able to fund your business with the capital already allotted?
- Is your business able to support your personal life?
- Are you able to meet your routine financial requirements?
- Is there a stable account to maintain funds for future liabilities?
A few tips to improve positive cash flow can be as follows:
- Focus efforts on products/services that offer higher margins of profit
- Increase your prices slightly after doing a thorough market research and comparison
- Reach out to a wider audience rather than being content with the same customer base
- Try to ensure that cash payments are made upon delivery of product or service rather than having to wait for debtors to pay
If you’d like to know more about up-scaling your small or medium business, do not hesitate to drop us a message or give us a call.