Motivation, Small Business

Must Know Things about Cash Flow: Business Finance Tips

2 Oct , 2014  

 

If you want to succeed in any venture, this is the first thing you should understand before starting out. Without the knowledge of cash flow, any business will go towards an ugly downfall.

Cash-in and Cash-out The first step to do is to sum up all the costs such as rent, payroll, advertising, products and services. Estimate cost for a duration of a month or a week depending on your preferences. Forecast sales and subtract your total estimated cost. This would give you an idea of the possible profit that you can gain. Decide whether the digits you are seeing match your ideal profit.

Avoid Credit Suppliers oftentimes provide credit for supplies that cannot be paid on time, in a form of cash or time credit. Avoid this habit as much as possible because any form of credit is always bad for your business. If this seems inescapable, you can take advantage of supplier discounts that range from 5% to 10% discount. Grab this opportunity to save money for your business.

Always Have Backup Cash There are always unexpected and emergency expenses in all types of businesses. Backup cash is very handy so make sure you include a budget for this to avoid further credit and financial strain. A tip to prevent overspending on maintenance supplies and equipment is to invest in quality materials and equipment to prevent regular repair.

Customer Deposits This is something that you need to be careful of. If your business is a catering service, individual policy applies, but generally, a client should be required to deposit at least 20% to 50%. If the service will be implemented in a month or a year, budget the deposit for the expenses that will be required for the event and be prepared when a client cancels the event because this may require you to return a portion of the deposit. Make sure your catering or restaurant policy includes an agreement concerning the amount of deposit that will be returned to the customer should they choose to cancel the event. Ascertain that the customer understands this.

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