6 ways to ensure a positive cash flow in your company

September 17, 2016 The health of a business is primarily represented by the cash available that can be used. These financial availabilities are known as cash flows. Cash flow is the difference between a company’s current receipts and payments. The fact that a company has a profit, but has uncollected amounts from customers, can create blockages that can lead, in the most pessimistic scenario, to the company’s inability to pay and insolvency. Here are some ways in which you can manage your financial resources and thus feed the company’s “blood” in the movement of cash. Set a target for cash flow: The best way to control the company’s financial availability is to make forecasts and estimates of them every week, so that in a period of 6-12 months you have a clear perspective and realistic for the money resources that come from the receipts and those that are distributed for payments. Do not spend more money than you have available until you have the ability to sustain the financial success of your business, even if you have the tendency and temptation to invest permanently for the future. There are companies that either have more money in their account than usual and make unfeasible expenses, or they want to create the impression of success and then invest in goods that do not bring profit or positively influence the company’s activity (for example: a new car , a high-performance computer, a larger space whose rent is much more expensive than is reasonable). Agree on stable payment terms: This will help you a lot to know when you need to receive money from customers to whom you have provided goods or services, which means you can plan your payments and estimate how much money remains to be invested in the business. Issue invoices without delay: Do not allow much time to pass between the time of providing the service or selling the product and the time of issuing the invoice. Also, make sure that you choose the easiest payment methods for your customers, so that there are no difficult situations that delay the entry of money into the account. If the payment terms are extended over 30 days, then make sure you have an advance of 25-50% for starting the service or delivery of the product for which your customer has opted. Make sure you always have a buffer amount in your bank account. No matter how difficult the situation, you should never stay at zero in your bank account. The turnover in a company is like blood in an organism and must flow continuously, constantly. When you have nothing left in your account, you depend on others. When you keep the buffer amount, you can always make a small infusion of capital. To find out more information and competent advice on how to manage the positive financial flow of your company, we look forward to hearing from you. The business consultancy, the fiscal and accounting expertise that we offer lead to the avoidance of some undesirable limit situations for the development of your business.