It is a big task to maintain positive cash flows in a business. Several external factors act against the business and it becomes a big challenge in such times. We have seen many finance professionals like David Milberg handle all aspects of a business very effectively. It is important that we learn from them and follow suit. Below mentioned are some of the tips that can help you maintain positive cash flows.
- Monitor spending: Post your spending each month, you have to monitor every component of your spending. Sometimes certain things may go out of hand and the budget may be disturbed. There are various expenses related to your business. If you have set a budget in the first place and also your spending goals for the company, you will not be getting any issues generally. A backup plan can also help you face any sudden cash outflow. You have to maintain a report of your spending each month so that you can keep a track of all your activities. You will come to know of any expense that can be controlled or could be avoided.
- Keeping a line of credit: It is true that you should not have huge credit in your business and if you have it may be damaging for your business. But we are talking about exceptional circumstances. This is a kind of Plan B that you can have for your business. You should be planning for this ahead because at the last moment it is not possible to get the required credit. When your cash flows are good, that is the right time to set up a credit line. Lenders will have a positive impression of you and it is easier to secure loans than in times of emergency when you cannot prove your financial position.
- Try to lower your interest and late fees: When you pay on time, there is no hassle at all. Late fees and higher interest rates apply only when you miss a payment on time. A default in one payment can lead to cascading effects on your financial stability. To avoid all these you can plan to set up automatic reminders or auto-debit from your account. Even if you forget due to your busy schedule, the payment will not be missed.
Along with the above, you should also try to boost the inflow of cash from your clients for a balanced flow.