How to Manage Effective Cash Flow?

Managing healthy cash flow in any business is a prerequisite. It directly affects the working capital and daily needs of a business. A good source of maintaining the cash flow is chasing the old receivables that are pending; a methodical framework is a must for the same. There is much-invoicing software that looks after the basic chores of sending invoices, chasing clients and reminding the leftover payments you need to make. All you need is going systematic.

In order to organize well, you must make a thorough analysis of capital flows, making a statement of expected payments would also help. Making cash flow analysis helps in expecting the dependency of working capital requirements on the inward flow of capital. Make weekly or monthly analysis that can state the expected inflow amount. Then calculate your weekly or monthly need of working capital, it will also help you to know your gross profit.

Send your clients invoices on time. Start early and don’t wait for getting late. If possible, send the invoices at the time of delivery of the product. It’s most likely to get paid faster having a good product on the client’s desk. Also, set a reminder of sending invoices. There are certain applications available in the market for taking care of the invoicing process. If it’s just a week before the payment would be due, and the cheque is not received then send the client a cordial reminder which will help you to get paid on time and maintain the cash flow.

In any case, the business is broke, start working for a secondary source of income as well. That will help you get your primary business back to financial soundness. You can then choose any related secondary source of income which costs you less and helps you get back on track. Also, if you have any issue in collecting the debts, don’t hesitate to take the help of any professional agencies having a good hand on getting the payments. After all, it’s on you to maintain the cash flow of your business healthily in order to maintain the financial viability and profit.

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