Ways to improve your cash flow
- Improve your revenue-generation capacity: Revenues are the economic resources received from your normal trading activities. For example, money made from sale of food and drinks by a restaurant. Assess the ability of your firm to generate revenue and seek to improve it. Set revenue targets and institute measures to achieve such targets.
- Control your expenditure: Expenditure refers to money spent on various aspects of business operation. For instance, money for office supplies, payment of salaries and wages, utilities purchase, among others. Seek to control how much is spent on these. While some may be reduced, others may not difficult. Setting a budget will help in this regard. A budget is a financial plan on how much to earn and how much to spend for a forthcoming period. Assess expenditure against budgeted amounts, analyze any variances (differences) and take corrective action.
- Maintain cash on hand at optimum levels: It is crucial to maintain not too much cash or too low cash on hand. To achieve this, you must assess your cash needs for a given period and hold cash sufficient enough to meet such needs.
- Invest “excess” funds: Sometimes, there may be funds that may not be needed for any operational use for a period. Such funds can be invested for additional funds. You must ensure that the investment is a credible one and that your firm will not lose invested funds.