Maintaining a healthy bank balance is very important for #business owners/entrepreneurs. It helps to minimise stress and ensure you always have enough cash to run your business efficiently and effectively.

In other words, managing cash flow is key and crucial to ensure enough cash is on hand to cover expenses, take advantage of opportunities and also grow your business.

Here are 10 cash flow management tips to keeping on top of finances to ensure your business has the necessary means to achieve its goals.

1. BUILD A CASH BUFFER

Find out your average expenses for one month and take this amount to be the minimum level of cash you need at the bank at any one time. Work towards not letting your bank balance go below this month. This will serve you well at times when your clients decide to pay you late with the cash buffer proving to be the difference between your business surviving or failing.

2. POSITIVE CASH FLOW OVER NEGATIVE CASH FLOW

Positive cash flow is when your business has more money coming in than it needs to pay bills while negative cash flow is when your business is spending more money that what it takes in, in other words, cash outflow is larger than cash inflow.

3. BANK TRANSFERS AT THE BEGINNING OF THE MONTH

You should schedule bank transfers at the start of each month to enable you see where the crunch points are likely to occur so that you’ll be able to plan accordingly.

4. REVIEW YOUR ACCOUNTS REGULARLY

It is advisable to monitor your sales and expenses on a daily basis or at least, monitor your business checking account, accounts receivable and accounts payable each week.

5. KNOW WHEN RECEIVABLES ARE DUE

Create an accounts receivable portal to help you monitor your customer’s payment habits. This will help you follow up with customers that pay late thereby getting paid faster. If any amount is overdue then don’t be shy about phoning up and asking for immediate payment. Customers will take advantage of you if you are not firm with them.

Also encourage on-time payments by sending invoices as soon as work is completed, invoicing online or emailing invoices and accepting a wide range of payment options.

6. PAY YOUR SUPPLIERS ON TIME

Make it a habit to always pay your suppliers on time at all times. This could really benefit you in future price negotiations as well as generating good will. It builds a buffer that you could fall back on if times get really hard.

7. CREATE SALES PROJECTIONS

Monitoring daily sales helps you project inventory needs so you have just enough on your hand to meet demand, instead of stockpiling excess inventory that costs you money to store and also maintain.

You can project quarterly sales on past history and future estimates to help you plan and budget for inventory purchases.

8. FORECAST THE CASH IMPACT OF GROWTH

Work with your accountant to forecast likely cash flow impact especially if you have just won a significant new client or see an opportunity for business expansion. This is important as nothing drains cash like business growth.

9. WORK WITH YOUR VENDORS

If all of your payables are due around the same time, this could lead to negative cash flow therefore talk to your vendors and see if you can stagger payment dates to help your cash flow.

Be sure to maintain good relationships with your vendors so that they can help you out.

10. BACK-UP PLAN

It is vital to have a back-up plan in case the business runs into cash flow problems. For example, some businesses have experienced cash flow problems in the past through no fault of their owners. Plan ahead in tandem with your advisors to identify resources like credit cards, factoring, loans or lines of credit etc.

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