Are you a small business owner looking to keep your cash flow tap running smoothly? Managing cash flow can be a challenge, especially in uncertain times. But there’s good news – you can take steps for financial security. In this article, we cover useful resources and proven steps for small business owners to safeguard cash flow.
From daily operations to the bigger picture, we’ve got insights to help. Ready to improve your small business finances game? Keep reading!
(Guest article by Elena Stewart)
Maintaining cash flow for your small business can be tricky, especially during these uncertain times. Whether you find yourself constantly juggling bills or just want to ensure that aspects such as payroll are always taken care of, it’s important to take steps toward financial wellness each day. The good news is, there are many ways you can do just that, with lots of tech resources available to help you stay on top of your money management.
Take a look at your daily operations to ensure that everything is running smoothly, especially where invoices and payment systems are concerned, and think about the big picture as well. Use the following proven steps for small business owners to safeguard cash flow, which will help you to get on top of your business’s financial health.
Consider your protection options
Protecting your finances is an important step, so you’ll want to carefully consider how to keep your money in good hands. This means hiring the best accounting services for your needs, planning for cyber security, and making sure you have the right business structure set up.
Forming an LLC provides protection for your assets in the event of a legal battle and even offers tax benefits that will save you money as a small business owner. Just keep in mind that the rules for starting a limited liability company are different from state to state, so you’ll want to read up on the formation requirements in your area.
Know what you can and can’t DIY
While there are several things you can do to protect your business’s finances, it’s important to understand which tasks you can do yourself and which ones are best left to the pros. Monitoring cash flow is a great example of something you should seek help for, since, as Nasdaq notes, it’s all too easy for business owners to overlook important details when they have a lot on their plates. You can find a business consultant to take over that task; just make sure you search on a job site that allows you to read reviews of their work and see the total cost; typically, a consultant will charge between $120-150 per hour depending on their experience level.
One task you can easily perform yourself is sending out and keeping up with invoices. Staying organized with your billing practices is a key aspect of maintaining good financial health, and you can go online to find an invoice generator that allows you to create professional-looking invoices for free. Along with a great invoicing system, Ordermentum points out that you can also think about incentivizing customers to pay early, which will benefit your cash stream.
You should also keep tabs on your credit score. It’s a free and easy way to make sure that you are making wise financial decisions and that there isn’t anything fraudulent on your account. It can take a while to establish great credit, but by regularly checking your credit report, you can see how particular choices affect your score and adjust accordingly.
Improve your inventory system
Your billing practices are a key element in maintaining cash flow, but one often overlooked aspect is the inventory system. If you’re not keeping up with product turnover, or if you’ve laid out a large amount of cash for inventory that’s just sitting on a shelf, you’re losing money. Utilize a payment system that integrates an inventory count, and perform a physical count regularly so that you always know what you have in stock.
Double-check your policies
When it comes to making sure your business has a steady stream of income flowing in, it’s also important to have policies in place that encourage healthy cash flow. This might mean tightening up your credit policy with customers, or setting up automatic payment reminders when a bill is due. You can also send out personalized emails to help prevent late payments from customers.
If you want to understand the financial aspects of your business from your customer’s perspective, then create a brief survey about things like your invoicing process or your automatic payment system’s usability. You can encourage more people to respond by offering incentives. A simple, small gift card can entice more customers to provide their feedback, which can help you make more effective finance-related decisions to grow your business.
Put practices in place to protect your finances
Maintaining good cash flow is a crucial aspect of running a successful business because it allows you to plan for both the distant future and the days ahead. This means you’ll have more flexibility to spend on necessary materials and tools without going into major amounts of debt.
Keep tabs on your finances and continue to grow your financial literacy by reading more articles.
Using these proven steps for small business owners to safeguard cash flow will take your business finances to the next level!
