For any business, cash is king!
Cash flow is the movement of cash in and out of your business. Cash is the blood on which a business needs to survive on a daily basis. Cash flow has always been the biggest pain point of SMEs and one of the main reasons why SMEs are unable to cross the 5-year time frame.
Many financial experts suggest that businesses must assess their cash flow on a daily basis.
Cash flow balance = Cash inflow - Cash outflow
Cash inflow includes cash received from customers, investors, owners or bank loan.
Cash outflow includes payment to suppliers, rents, interests or withdrawal of cash by owner.
Thus, making a lot of profits do not translate to healthy cash flow if most sales come in a form of accounts receivable.
6 Tips to prevent cash flow problem
- Lease assets such as equipment, vehicles, or program license when possible.
- Cash in on assets when it’s not in use or no longer needed.
- Negotiate for credit terms for accounts payable in advance without trading off good relationship with suppliers.
- Long-term finance of assets such as real estate or equipment rather than purchasing using your working capital.
- Track and collect receivable quickly.
- Implement a better system to manage cash flow as using a spreadsheet to track every cash inflow and outflow transaction daily is very time-consuming.
To grow your business, there is a way to cut the long route by employing NESTED. This cloud computing solution will provide a real-time view of your cash flow. At anywhere any time, you’ll know the available cash for your business.