Easy ways to manage cash flow for your business

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The cash flow; it is basically the movement of cash and cash equivalents that come in and go out of a company. The cash flow statement measures how well a company manages its cash position, means; how well a company generates cash to pay its debt obligations and funds its operating expenses.  

Positive cash flow means your business is doing well & you can pay off your debts. Negative cash flow results mean; you need to find resources of income to be able to pay your debts.

The cash flow is different from the income statement & the balance sheet because it does not include the amount of future incoming and outgoing cash that has been recorded as expenses & revenuesHence, cash is not the same as net income, which includes cash sales as well as sales made on credit on the income statements.

It is necessary to organize your cash flow by dividing into categories that includes cash flows from operating activities, cash flows from financing activities and cash flows from investing activities. An organized cash flow will help you to figure out where your business stands. Below are a few of the simple yet powerful tips to organize cash flow of your company:

 

· Identify your business risks & prepare in advance

· Monitor cash flow regularly

· Cut your costs, control cash outflows

· Consider selling assets that you no more use

· Create a separate bank account for your business

· Get a business line of credit

· Lease equipment instead of buying

· Get paid faster using the latest technology such as mobile payment solutions

· Speed up your payments offering deals.

· Pay off debts before any crisis

· Focus on cash flow in-spite of profit

 

Profits are meaningless without cash. Building and keeping an adequate amount of cash provides maximum flexibility & opportunity to any business. Businesses that do not exercise good cash management may not be able to make the investments needed to compete in market.

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