Managing Cash Flow

 

This time of year can be unpredictable for businesses—whether it’s a period of increased activity or a temporary shutdown. That’s why understanding and managing your cash flow is critical. Effective cash flow management ensures your business remains resilient and ready to grow, no matter the season. Here are some practical tips to help you stay on top of your finances:

1. Understand Your Cash Flow

Start by preparing a cash flow statement. This document tracks all cash coming in (from sales, loans, or investments) and going out (expenses, payroll, inventory). Regularly reviewing it will help you identify patterns and anticipate potential cash surpluses or shortfalls.

2. Optimise Your Receivables

Speed up customer payments by offering incentives like early-payment discounts and setting clear payment terms. Use digital invoicing and send reminders to minimise delays.

3. Monitor Your Inventory

Excess inventory ties up valuable cash. Implement inventory management systems to maintain the right stock levels and avoid overordering.

4. Plan for Seasonal Variations

If your business experiences seasonal highs and lows, build a cash reserve during peak periods to cover slower months. You might also explore promotions or introduce new products and services during quieter times to boost income.

5. Secure a Safety Net

Establishing a line of credit or emergency fund can provide a buffer during cash flow shortages. It’s best to arrange financing while your business is in a strong financial position, so you’re prepared when challenges arise.

6. Track and Forecast Regularly

Use real-time reporting tools to monitor your cash flow and create forecasts. Proactive planning helps you spot and address issues before they become major problems.

At iKeep Bookkeeping, we specialise in helping businesses manage their cash flow, develop budgets and forecasts, and plan for financial security. Contact your account manager today to learn more.

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