The future value of your business is determined by the long-term investments you make today. Businesses with good financial health manage their business capital efficiently and maintain a good balance between company growth, its profitability, and liquidity. Cash flow is the life line for small businesses and can mean the diference between success or closure for a company. Tighter control of your business capital is critical especially for SMEs.
Manage Your Inventory
A company’s working capital can be strongly influenced by the inventory process. It’s important to strike a balance with your inventory and balance sheet by constanly monitoring what you buy and what you sell – the challenge lies in maintaining optimum stock levels.
Investing in a good procurement and inventory automation solution can effectively promote better communications and decision making between departments.
Cash Flow Management
A well informed cash flow budget can truly foster a cash management culture in your business. This results in effective management of revenues and better payment standards. To make the right decisions, it’s important to keep your cash flow budget up-to-date which reflects all financial changes in your business.
Credit Extensions for Customers
Applying due diligence to understand late or failed payments is quite important. In today’s digital world, there are smarter and efficient ways to get paid. By sending your invoices electronically, you can speed up the process of billing and collection.
- Setup an online payment option
- Setup recurring payments
- Mobile App payments
- Card/Paypal/Check/Cash payment options
Staying up to date on costs and expenditures is vital to decide cut backs. Analyze all areas costs can be reduced. Here are a few examples below:
- Procurement Costs
- Late payments
Review your account payables regularly and determine how you are standing up interms of credit obligations. An aging schedule can help you understand quickly how much you owe and how much are past the due date.
Try to enforce a strong payment discipline in your business. Paying on time helps develop a great relationship with your suppliers, which interm helps you make better deals and discounts. On-time payments also helps keep your suppliers for a long time making the process of procurement and delivery smoother. Paying your business loans on time will keep your relationship and credibility with your bank strong especially if you are a small-medium sized business. This ensures that you can obtain better loans in future at ease.
Keep yourself updated with the latest trends in the market, the softwares being used, and the new processes being followed to manage business capitals. Attend conferences, webinars, and join groups to stay ahead in the industry. Remember that knowledge is as essential a tool as any to maintain a high level of performance for your business.