About Bookkeeping can ensure you have up to date regular cash flow forecasts for your business success. We will help you to predict if your business will have enough cash to support the operations of your business or for other activities your business in planning for in the future, such as capital expenditure or other expansion.
The Cash Flow Analysis is a tool that monitors the way money moves in and out of your business. It is the difference between being able to open a business and being able to stay in business.
The goal of monitoring your cash flow is to maintain sufficient cash for your business operations from day to day, week to week, month to month, year to year. If you know that a particular time of the year is slow for sales, then if you have larger bills (such as insurance) you can plan to cut back on other expenses that month to cater for what is coming in and going out.
A business can look for creative ways to improve cash flow or manage credit:
- Shorting the period of credit your offer to your customers – for example, if you currently offer 30 days from EOM, change it to 21 days, or even 14 days.
- Negotiate payment dates with suppliers, perhaps paying later, or working out installment payment plans.
- Making better use of assets, for example if you have spare office or warehouse space, perhaps you could hire it out to other businesses
- Making sure as little interest as possible is being paid on any borrowings
- Pay loan and debts early if possible and look at consolidated any debts into one long term, lower interest rate package.
- Avoid offering discounts for early payment. Although this can be an effective way to ensure payment on time, it can cost you in the long run. You need to monitor this to see what will be more “Cash Flow Friendly”.
Careful management by a trained bookkeeper, such as the team at About Bookkeeping, will help your business ensure you are aware of all future shortfalls so that these can be planned for in your business strategy.
This will mean that there is always enough cash to pay creditors and plan for expansion.