Maintaining Healthy Cashflow: How to Look after your company’s money?
Posted 07 Aug 16
Maintaining healthy cashflow is one of the greatest challenges every small business owner faces at some point. Running your business requires discipline and high organisation skills and often means dedicating your time to do administrative work rather than plan an exciting investment.
Focusing solely on profit is risky, because even the most profitable businesses can run out of cash. However, it is possible to achieve a perfect balance between developing your company while keeping it safe from any major financial failures.
Although running a successful company requires a strong business plan, which will give you an overview of your financial aims and goals, it is equally important to be aware of how your business performs on the daily basis. A lot of young company owners keep their focus on the future without realising how much money they need to keep their companies afloat day to day. Creating a step-by-step plan and keeping a detailed diary are keys in reaching successful future.
It is important to always keep some extra money in case any unexpected spending. It might be the need of buying more stock or replacing important equipment which can often slow down your company’s performance for months if you are not prepared.
Controlling costs is key to cashflow management. Review your costs regularly and discuss the possible cuts with your accountant or financial advisor. It might turn out that there is a better deal you can get from another supplier or maybe you simple are overpaying your taxes. As time goes by things around you will change and you need to remain alert to be able to adapt to them.
There are many problems you will need to solve as a business owners and a number of difficult decisions to make at every stage of your company’s development. One of the major reason why business owners fail to maintain heathy cashflow comes simply from fear. Not charging enough for your products and services can be harmful both to you and your clients. If your only strength in the market is low price, you will soon find yourself putting more money into your business than you get from it. Moreover, you will need to decrease the quality of your product to keep the price low which will result in losing your clients.
It is important that you keep a clear relationship with your clients. Often young business owners fall into a trap of becoming too friendly towards their clients sacrificing the professionalism, which is crucial to form an unambiguous contract. Keeping the balance between friendliness and professionalism is the key in forming clear relationships with people you meet through your company.
One of the best investments you can make in order to avoid any cashflow turbulences is hiring a professional and friendly accountant to take the burden off accounting and bookkeeping off you. Moreover, a good accountant will be able to create a personalised strategy to keep your finances under control. If you would like to find out how you can better your cashflow management, contact our professional accountants at Tawanda Accountants.