Getting your cash flow right is essential to running a successful business, and there are specific management techniques that you can pursue to achieve this. Read on to discover how to manage your small business cash flow for the best results.
How Does a Well-Managed Cash Flow Look?
With a healthy cash flow, you will meet timely payments, whether paying employees, taxes, rent, or other essential operating costs. The cash coming into your business should be managed by your expenditures, in which more money comes into the business than goes out.
How to Achieve Healthy Cash Flow Management
You can take the following steps to achieve an effective management strategy;
1. Create a Cash Flow Forecast
With a cash flow forecast, you can quickly identify areas that need attention. For example, if your raw materials prices increase, you must assess how your business will manage this and how to prevent expenses from generating losses.
Your cash flow forecast should act as a record of indication, factoring in seasonal changes to profits, salary changes, and other elements that will affect your business.
2. Calculate Revenue
Following your forecast, it is time to calculate how much revenue you expect to make in a given timeframe. For example, if you are hosting a seasonal sale, you can calculate the level of revenue you expect to generate.
3. Identify and Review Expenses
Ensure you understand your expenses, such as wages, salaries, and rent. As a small business, you can use your previous expenses as a guide to go off, factoring in growth (team onboarding, upscaling rent) where required.
4. Report Management
The best thing you can do as a small business is to monitor your cash flow regularly, manage your reports and have a proactive approach to how your company handles cash.
Are You a New Gold Coast-based Business Looking For Cash Flow Management Support? We Can Help
It can be challenging for new businesses to predict cash flows, and you may need support establishing an effective management strategy. Get in touch today to receive help from our skilled Accountants here at Accounting Tax Solutions.