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Improving Your Cash Flow is a Vital Key to Business Success
Improving Your Cash Flow is a Vital Key to Business Success
Whether a business is a multi-billion dollar conglomerate or the tiny mom-and-pop convenience store, in business, a positive cash flow, is vital to one’s business success.
Hawthorn,
Victoria,
Australia
(prbd.net)
18/08/2011
A positive cash flow is still one of the fuels that powers a business' operations. Cash is the primary indicator of a business health as well as enables a business to survive and prosper.
In today's uncertain economy, with its ever increasing interest rates and customers tightening their belts, many small businesses are in a dire state of struggling to stay alive, let alone prospering. In fact, after the rippling effect of the global financial crisis, lots of new businesses don't survive six years!
The primary reason for this is bad cash flow management. Too many business owners, particularly self-employed people neglect their cash flow until it is too late to recover.
So the big question is: How can a business effectively manage its cash flow?
To effectively manage cash flow, let us first understand the terms cash flow and business management.
Cash Flow refers to the flow of cash into and out of a business over a period of time. It is basically affected by a business' accounts receivable, inventory, accounts payable, capital expenditures, and incurred debt.
Ideally, during the business cycle, there is more money flowing in than flowing out. This positive cash flow will enable businesses a chance to build up cash balances with which to plug cash flow gaps, look for expansion and a time for giving reassurance to lenders and investors about the health of one’s business.
Business owners should be aware that income and expenditure cash flows rarely transpire together, often with inflows lagging behind. A business must aim to speed up the inflows and slow down the outflows.
To improve everyday cash flow, businesses can:
-- employ the services of an accountant, though this would entail additional expenses for your business, accountants could monitor and keep up with the cash flow of our business.
-- another alternative is avail of the services of an online accounting software. The software can do the same accurate and speedy work as an accountant however, with lesser cost as well as it does not require a real accountant to operate.
-- get a handle on your cash flow. You must need to understand the current status of your business’ cash flow. Learn and understand the balance sheet of your business thoroughly. create a structured cash flow statement that include interest payments, debts, and inventory.
-- get collection faster. Cut down the time between a customer's order and receipt of payment by speeding up customer orders by faxing or e-mailing their orders to you and mailing out invoices the same day a customer places an order that includes a prominent place and due date for payment and notice of a late payment fee if that date isn't met.
-- carefully set your business credit terms. If your business is involve in offering credit, you must set clear limits as to your credit terms.
-- ask for extended credit terms from suppliers. You must try to negotiate the right deal with suppliers by not only negotiating for the cheapest possible price but as well as for its delivery times, payment terms or the quality of the goods.
Businesses nowadays should effectively manage their cash flow to succeed.
About Shoebooks:
Shoebooks is a provider of premium online accounting software solutions for Australian SME businesses. An accounting software application helps businesses track and manage accounts and transactions in order to improved cash flow. Shoebooks is located in Australia at Unit 12, 118 Church Street, Hawthorn, Victoria 3122. Call Shoebooks at +613-9818-1515 (toll-free for Australia: 1300-882-428) or visit WWW.SHOEBOOKS.COM.AU
About
Shoebooks is an Australia-based online bookkeeping company. We offer flexible, efficient and affordable online bookkeeping solutions to any bookkeepers and business owners. We provide the simplest & most comprehensive online bookkeeping solution. We also offer bookkeeping, payroll, consulting and training services to many business enterprises. Visit Shoebooks website at www.shoebooks.com.au
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