Whether you’re a startup or an established company, managing cash flow is always a challenge. If you don’t pay close attention, you may fail to service debt in a timely manner, or not have enough funds on hand to pay your bills. Developing an effective cash flow management strategy is a critical leadership task. If you want your company to succeed, you need to develop a cash flow strategy today. Here are a few things to think about to get cash flows right.
Don’t go it Alone
Entrepreneurs often pride themselves on their self-reliance. However, when it comes to financing and cash flows, don’t go it alone. Find an accountant who can help you analyze your business and provide advice for managing cash flows effectively. And leverage the talents and capability of companies that can help you optimize your cash flows, like the team here at VerifiaBill. By using a customized web portal and delivering you one simple bill, VerifiaBill saves you money and time that would otherwise be spent bookkeeping.
Figure Out Your Financing
Most businesses need some form of financing. For startups, they may require significant amounts of cash on hand to tide them over until their product is ready for market. Established companies often need a line of credit to ensure steady cash flows throughout their business cycles. As a business owner, you need to determine whether you are going to use debt or equity to finance your company. Each method offers advantages and disadvantages. Determine what works best for you, and then secure the financing you need to keep your company’s cash flows healthy.
Sequence Your Capital Investments
Your business may need critical equipment to grow – machinery, vehicles, and additional office space – but does it need them right now? And can you afford those capital outlays? Purchasing equipment you think you need now can leave you strapped for cash and barely solvent. Ensure that you do a cost-benefit analysis before you make any major purchases; will the greater productivity/profit from the investment offset the cost? If not, it may make sense to hold off on the purchase.
Cash flow management is a critical management task. Are your cash flows optimized for success? If not, consider these tips, and start improving your company’s cash flows today!