Business Cash Flow: Managing Cash Flow for Small Businesses
September 8, 2011 – 7:12 amUpholding a small business is like maintaining your own family. Trying to give your family the best of what you can do to keep them happy and satisfied is nothing different from keeping a consistent flow of income and expenses available for your business at a given time. A suitable business cash flow is extremely important and necessary for the survival of any small businesses. To fully understand its role, think of it as a small business’ need for its continuation: the more cash you can have in your business, the better the status of your business will be. Usually, your business will have a promising status if it can maintain and settle its financial obligations to allow a smooth business management and operations.
Cash flow can occur in two ways, the cash inflow which basically means the amount of money that goes into your business and the cash outflow which means the opposite. Cash inflow occurs when a business takes or receives money from any sales transaction, collections, extra funds or from selling a fixed asset. As for cash outflow, it occurs when a business settles owed amounts, such as paying for something that the company has bought, and any other operating expenses, etc..
A good business cash flow administration begins from the ability to perceive the nature of the above concepts. Yet again, the main intention of handling your cash flow appropriately is to increase the small business’ assets that can easily be converted into cash. This will require you to have a close monitoring of your business cash inflows and outflows.
The appropriate and needed management of cash flow involves enhancing the effectiveness of the activities that bring in cash. Financial statement are usually a good place to start when trying to increase your cash. Moreover, small businesses must make sure that their billing and collection records of are able to function without wasting time and effort. On the other hand, incentives are also an effective way to encourage early settlement from customers. Small businesses must also try to set more strict credit requirements to avoid the risk of non collectibles. Extra cash can also be produced from growing funds or use the money to participate in a business enterprise that offers a possibility of profit.
Finally, cash outflows must to be administered in a way that allows the business to easily pay any of its dues i.e. suppliers, service providers, or taxes. Indeed, having cash on hand available will be a great advantage to any business.
In general, a good and suitable business cash flow will let you run your business smoothly. Being aware of the things that affect your cash flow for your small business is a good way to manage your finances.
Acquire Capital Solutions provides short-term and bridging finance in the South East Queensland area. With over 30 years of experience in the property and property finance area, Acquire Capital prides itself on providing fast loans and personalized service far exceeding anything the banks or other institutions can offer.
For more information on business cash flow visit http://www.acquirecapital.com.au/?utm_source=eza&utm_medium=article&utm_term=keywords%2Bin%2Blink&utm_content=1&utm_campaign=direct
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Tags: Business, Businesses, Managing, Small
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