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Cash Flow Management

When you are in a business, you need a good understanding of cash flow and how to control that. Every business has expenses. But every business will ideally have an income as well that will pay for the expenses. Cash flow management is a series of practices that ensure that your business will remain solvent. It is basic in principle. You need more money going in than is coming out. This is simply good business practice.


Breaking Even


This is essential for any lasting business. For something to be worthwhile, you at the very least need to ‘Break Even’. So, what does that mean? Well, it means that your outgoing cash flow matches your incoming cash flow. In essence, you are making enough money so that all the things that you are paying out for are not coming from your reserves, or even worse, your own pocket. To at least break even will mean that your business survives. (source).


Emergency Cash


Always have emergency cash reserves. Business is unpredictable and so is the economy. You never know when something is going to happen that will impact your business negatively. Having some cash to fall back on will help you manage when business turns bad temporarily. (source).


Invoice


Be clear about the terms and timeline on invoices before you sign on a client. If you are clear about when an invoice will arrive and when payment is expected, this can help you plan a cash flow projection. A cash flow projection maps out all your incoming and outgoing cash and you can help plan when you will need extra revenue or when you can plan on an expansion of part of your business. (source).


Delaying or Reducing Expenditures


Delaying expenditure, even by a few days can really help your cash flow. If you can manage to delay until you have an income of a similar amount, then the two should cancel each other out. You should also minimise anything that you are paying out for. For example, if you have excess storage, rent it out, excess stock, sell it. You need to be paying out as little as possible in order to maximise what is coming into your business. (source).


Cash flow management is a great way to keep on top of your money and in business, this is key to survivability. You always need to know when you are paying out for something and when you are having money come into the business. This is key to staying ‘in the green’ and solvent. This is also a great way of identifying problem areas in your business. Silver Insolvency Solutions can help you manage your cash flow and remain in business. To find out how we can help you, please, visit our website on https://www.silverinsolvencysolutions.co.uk/, email us on enquires@silverinsolvencysolutions.co.uk or call us on 0203 961 7169.


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