Capital is the fuel of any business, for a business to continue to stay alive, the capital must be flowing in and out every time to keep the business afloat.
Cash flow is very important in every business especially small and medium scale businesses. SMEs need to monitor their cash flow mostly because they are not running the business with so much capital and there might be little or no capital to fall on.
Hence, it is very important to monitor your business Cash flow as a business owner or manager; these are some tips that will help you to manage and monitor your business’s Cash flow.
Know Where The Money Is Coming From
As a business owner you have to know analytically where your funds are coming from. Forecast how much you can get from the different sources that you have highlighted.
This exercise is important so that you can actually know how much your business is likely to make over a period of time.
Keep Your Books Accurate and Up To Date
This will make you know the financial state of your business, do this every time to know how much to spend and what to spend on in a business.
Keep Your Accounting Simple
As a small or medium scale enterprise, you do not need an elaborate accounting system. Instead, you need a simple efficient accounting system. If you cannot create this on your own, get a professional accountant to do that for you and use it to monitor your cash flow daily to see how your business’s cash flow is.
It is good to plan for the funds that you are expecting, but do not spend available funds before new funds come in. This sounds basic, but in reality it has led to the end of so many businesses.
Build A Cash Reserve
Retain your profits as much as possible. That is what you will fall back on any time. Every business owner always want to reinvest every fund they can get but be wise, re-invest but do not reinvest all the profit and funds you are getting.
In conclusion “Cash Is King” when it comes to doing business. Write this where you can see it daily.