Cash is king in business. You need enough cash on hand to operate your business smoothly. In addition to ongoing expenses, you may need cash to deal with sudden financial requirements. For instance, your supply vehicles, machines or equipment could breakdown all of a sudden. One way to deal with such financial emergencies is by taking a loan from a licensed moneylender in Singapore. However, you should also look for a long-term solution to your cash flow problems. This needs careful planning and proper implementation. Here are some useful tips on how to improve cash flow of your small business.
First things first, you should take some time to analyze your company’s cash flow. For instance, some businesses can expect a high cash flow during festive seasons, while others are likely to receive more cash during the year ending period. You need to check your past records and set your cash flow expectations accordingly. Once you have a clear idea about when to expect good cash flow, plan your finances accordingly. It is also important to generate cash flow projection reports. There are some good software tools available for the job. Projections would help you make informed decisions. List out your upcoming expenses and receivables, and plan accordingly.
All cash flow improvement ideas have one thing in common. All of them suggest ways to speed up your collection and delay your payments. Fair enough, but this should be done with care. You should not repeatedly ask your clients for quick payments. This could jeopardize your working relationship with them. Similarly, slowing down your payables beyond a point may harm your reputation. One good idea would be to revise your current payment terms to make them more favorable for your cash flow. Instead of ruthlessly speeding up your collections and delaying you payables, take the mid way. Make your payment term a win-win for both parties. Send polite reminders and announce rewards for quick payments. Setting a feasible payment term will help you and your clients to set realistic expectations, which would reduce the risk of any relationship failure.
Some businesses do not even notice they are paying for unnecessary things. For instance, if your business is paying for two supply vehicles per month, check whether you can do the same job with one vehicle. A thorough investigation of your ongoing financial obligations may help you identify certain unnecessary or additional expenses. Cut any such overhead costs to improve your cash flow. Instead of buying new equipment, you can take a loan from a licensed moneylender in Singapore. This would help you save the cash in hand for emergencies.
To make the venture a success, you need to full support of your employees and management staff. Tell them why it is important to improve cash flow. Show them ways to make the improvement and advise them on what role they can play in improving the company’s cash flow. For instance, your salespeople can tell your customers upfront about your payment terms and any rewards or penalties for paying in advance or late, respectively.