6 Tips to Manage your Cash Flow Effectively

By: Atkku Services
 
ISELIN, N.J. - Oct. 24, 2014 - PRLog -- Trying to run a business without managing cash flow is like planning for the interior works of your 10th floor building without even constructing a basement. Thus, Cash flow is to be given utmost priority on all business.

Cash flow analysis includes three basic elements:

Accounts receivable: What customers and clients owe you.
Accounts payable: What you owe your suppliers.
Shortfalls: You hope not to have these, but they do happen.

You must effectively manage all three if you would like to navigate your business towards success. Of course, the most effective direction to paddle a canoe is with the present. You’ll go quicker and won’t wear yourself out. By constant token, your business are going to be healthier if you manage your income toward the profit line. Here are some tips to assist you row your income boat successfully:

1. Ascertain Your Breakeven Point
You should recognize once your business can become profitable, not as a result of it'll affect on your cashflow — as a result of it won’t — however as a result of it provides you an early goal to attempt for and a ready-made target for sticking out future income. Negative income and negative profits make a grim combination. Focus your efforts on managing your income with an eye toward reaching that moment once you understand your initial profits.

2. Have some Cash Reserves
You will have cash shortfalls at any time. Your business survival could depend upon how you manage through those shortfalls. If you begin with some cash in your account, then it might be easier for you to focus in cashflow and you won't stress about the shortfalls at any point of time.

3. Collect Receivables at correct time
Always Keep 30 to 60 days terms in contracts to a minimum. Watch on receivables and follow up the customers at regular intervals on gathering outstanding payments .

4. Encouraging Customers to pay you quicker
Offering early payment discounts and always keep credit requirements strict. Establish a written set of standards which state who are eligible to claim credit. Enforce those standards stiffly. You dont need each client to meet you each time for credit approval.

5. Extend all your Payables Longer
Get the best deal you'll be able to on payables. Extend your payables to 60 or 90 days,  Some of the suppliers charge late fees, however, thus check that you pay on time.

6. A Perfect Cash Flow Monitor
Keep tracking on the cashflow in your business. For instance, whenever you reach a certain threshold of  $1,000 you will be getting notification from the assigned member of your team (or) from the outsourced concern.

Source: http://www.atkku.com/blog/Home/AtkkuAllServices/21

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Tags:Accounting Services, Accounts Receivable Management, Accounting And Bookkeeping, Manage your Cash Flow
Industry:Accounting, Business
Location:Iselin - New Jersey - United States
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