Sure, getting lots of sales is a great way to earn a positive cash flow. More members and customers automatically means more income, so it’s understandable to think this way. However, there are internal practices that you go attend to that may even increase this positive cash flow even more. Small, simple changes to help monitor cash flow will make a difference in your income and it is so easy to do.
First you need to plan and monitory your cash flow in order to ensure that everything is going as it should. This will help give you a budget to meet and maintain, as well as plan for cash shortfalls or obstacles that may occur.
Cash inflows vs. cash outflows
Draw up a cash flow statement to help you monitor cash flow. It will assist in forecasting when and how your money is coming in and going out. It depends on your personal preference and business size as to how often your forecast will be. Your options to monitor cash flow include weekly, monthly, quarterly or annually.
Monitor cash flow against predicted cash flow
As time progresses, don’t just toss your cash flow template aside. You need to constantly monitor the actual amount of income coming your way and compare it to your forecast. More importantly, you also need to monitor the outflow that is leaving your account and check to see if you are on track. Hopefully, your numbers are similar. If not, you may need to review your budget and make some changes as appropriate. Also remember that throughout each forecast, don’t forget that you may need to adjust your predictions due to changes in the year, e.g. in the Christmas time period, you may need to amp the outflow when you hire more staff in your shop, but also increase the inflow that you are expecting to receive.
How to fix your cash flow management
Once you have your budget down pat and you are able to monitor cash flow for your business, this is the time where you review and adjust your cash flow management. There are small changes that you can make in your business that can really make a big difference when it comes to your cash flow.
- Monitor your stock: Figure out which items in your store are high volume and which are low volume. Bulk buying low volume stock is a big no-no. Once it hits that expiry date and you have so many more of the same expired items in your stock room at the back, you are unable to sell them anymore and there is nothing you can do but throw them away. This will be like you are literally throwing away money, so be vigilant when it comes to what stock to buy and how often.
- Another way to view buying stock is buy less, but more often. It can be tempting to bulk buy stock to get this task out of the way, but it means that you have less chance of wasting stock and ordering more than you should.
- When you monitor cash flow and realise that you have unpaid or late bills coming in, then ensure that send out invoices quickly and chase outstanding bills promptly.
- If you have unused equipment that is sitting in your shop or club gathering dust, try to lease it out to people or sell it so you can make some extra income.
When you monitor cash flow, you subsequently will be able to effectively manage your cash flow. By following these simple steps, you will be able to control your cash flow better and really amp up the cash flow coming your way.
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