30 August 2016
If you run a small business, one of your most pressing concerns is likely to be how to increase cash flow. After all, cash is still king! And will remain king for a long time.
The truth is, that if your small business is ever going to grow and be successful, cash has to be properly managed. It is not an exaggeration when they say that it takes cash to care.
But how can you increase cash flow when your small business is already strapped for cash without any promises of a significant cash injection?
Firstly, you should bear in mind that cash can come from three different sources – from daily trading or operations, from investments, and from financing. However, in the same way, cash can be used up by these three sources.
If you want to increase cash flow, the aim should be to increase the cash inflow while reducing or maintaining steady cash outflow. Some possible ways of increasing cash inflow include increasing cash sales, obtaining a loan or acquiring funds from new investments. However, the only way that cash flow will increase is if the cash generated from these new sources, is greater than the associated expenses.
There are several other ways that you can increase cash flow, however, successfully increasing cash flow in a manner that is sustainable requires careful forecasting and planning. This means that a cash flow forecast is an essential tool that will help you to plan your cash management in such a way that cash flow is increased. I have assisted many small businesses in preparing cash flow forecasts which help them to see how their actions will affect their cash resources.
A rolling 12-month cash forecast is a great way to get started.
Please contact Glenn Thomas to discuss a cash flow forecast for your business via email at Glenn.email@example.com.