Following is a guest article from Felicia Meyerowitz Singh, Founder and CEO of both Akoni. Akoni helps companies manage and improve the returns of the cash flow.
Cash flow is one of those problems SMEs struggle with the maximum. It’s a subject much discussed and lots of owners of Small Firms will affirm that it is a significant issue of theirs.
To be able to keep your company’cash flowing you will have to be sure you are handling your cash correctly. Careful cash management is creating revenues that bring in more cash than you are spending on your inventory, your staff and other business expenditures and to handle this on a continuous basis. It boils down to gathering data, reviewing and reviewing it and then dispersing money where it is most needed. This may sound quite straightforward but most small and medium sized companies don’t take the needed measures in this aspect.
1. Money Indices
You need to review your expenses such as rent, stock, salary and wages and taxes on a normal basis. It is important to always know what prices you’ve got and make a strategy for the future regarding what those costs will be and if they will hit your bank balance. Plan precisely when and how far you will be spending and always ask yourself why you are spending the cash on every expense. This way you will have the ability to find out exactly what your necessary costs will be and which ones you could save on. There are many different cash forecasting tools which could help you map out of your spendings.
2. Monitor incoming payments
Check your accounts often for payments coming from. Late payments are a problem that many SMEs face and they can often be the motive behind running low on cash. To avoid this be sure that you bill your clients promptly and to send statements to the perfect person. Keep track of payments that are outstanding and take steps to chase late payments. There is nothing wrong with providing clients a nudge. A great, non-invasive, way of doing this is sending out reminder emails to support clients to pay outstanding bills. Visually appealing mails, with a very simple call to actions, such as “Pay Now”, linking into a payment website, will go a long way.
3. Dream big, stay humble
Using an expansive vision of your business’ future is significant and ambition is wanted. However, it is important to stay realistic. The only certainty you’ve got is that the future of any company is uncertain. Even in case you’re able to adhere to a particular routines in earnings, then it doesn’t mean that these will last as such. You can’t predict the behaviour of potential clients and rates change all of the time, in a inconsistent way. Thus it is smart to anticipate the worst while working for the very best, when handling your business’ cash.
4. Maximise the returns on your cash holdings
An aspect almost always failed by SMEs is making certain that the company’ cash holdings are generating the most amount of returns, based on the best rates of the market. This is partially due to a lack of comprehension of market activity, but largely it is a scarcity of resources and time to scan the market to find the very best rates and transferring the company’ cash around so. Akoni stepped up and created a tool to automate this process. We offer a platform which scans the market to find the best rates and cash can then be constantly allocated in a way that will increase yields, in only a couple of clicks. In this way it is possible to make extra cash for your company whilst not adding another task into the to-do listing.
If you follow these basic principles your company will be in a secure position to continue working and you may correctly facilitate expansion with healthy cash flow.
Leave your email below to keep current with our hottest tips, tricks and trends on all things industry?