Doing business involves a day to day financial transaction. Money comes into the business when sales are made or when services are rendered. Money goes out of the business when expenses are made. Above all, a healthy business should have a positive cash flow.
Cash Flow simply means the movement of money in and out of a business. Cash Flow is said to be positive when your business income is higher than your expenses. But if your expenses are higher than your income, then you have a negative Cash Flow.
How can you have a healthy cash flow? How can you ensure that your business Income is higher than your expenses? The answer is simple; develop a good money management strategy for your business. In case you have none, these 5 tips below will help you develop an amazing Money Management System for your business.
(1) Keep Accurate Financial record.
Keeping a clean and accurate financial record is a good way to start your money management system. Many businesses keep records of their day to day financial transactions, but not many of them have accurate financial record.
(2) Know the total number of ways your business receives income and the various forms through which expenses are made.
How many sources of income does your business have? And what are the things that constitutes your business expenses? Ability to answer these questions will help you to balance and regulate your expenses with respect to your income.
(3) Spent Money wisely.
Focus on your business needs rather than wants. Reduce spending on luxury items. Buy only what you can afford it. Buy those goods in bulk which can be stored. Save the remaining money out of reach so that you are not tempted to spend it. When you go out, carry only as much money as you intend to spend.
(4) Generate sufficient income.
If it is possible, extend the range of your services so you could have more customers. Don't limit your services to include only a specific domain or class of customer, extend your reach. You can sell alternative products if possible.
(5) Save regularly and invest prudently.
Any business that receives money from sales of goods or rendering of services and decides to spend all on capital projects and other investments is running a crazy risk. And if care is not taken, the business may go bankrupt or fold up. It is therefore adviceable that you should save a certain percentage of your business Income for future investments or emergency situations such as breakdown of machines during operation, maintenance of facilities, medical emergencies of company staffs and workers etc.
Also, when investing in a new business, conduct a background research to know more about the business you want to venture in before putting your money. This is important so you will not fall victim of fraud.
There are many more financial tips on business and Finance management. In order to receive updates on my future posts, click the follow-up button.
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