There are various factors based on which health of any business can be determined. Out of the multiple factors, few factors reveal the true picture of the business’s status. Cash- flow is one of these factors through which the true position of a business can be revealed. The money needed for day to day expenses and for carrying out the daily business operation is called cash- flow- the flow of cash in the business, which facilitates the proper functioning of the business. The negative cash- flow says allot about the financial health of the business. When the expenses are more than the revenue, then the problem of negative cash-flow arises. Negative cash-flow can cripple down the business and lead to shutting it down. Therefore, the issue of negative cash- flow should be avoided right at the beginning. The main reason for negative cash-flow is the imbalance of accounts receivable; that is, the customers’ payments are delayed. Many businesses have started using the accounts receivable technologies to avoid negative cash- flow concerns.
The following measures can be adopted by the businesses to improve their cash- flow position and avoid risks and uncertainties: –
The suppliers and other third parties are very important to the business. When we talk about cash-flow, it’s not just the revenue that we should be concerned about but also the expenses we have to pay for. Build a healthy relationship with the suppliers. The suppliers of raw materials and essential goods are one of the important parties to the business. The operational goods or the stocks bought by the suppliers on a regular basis should be taken care of during each transaction rather than collecting it and oiling up for the end of the month. When you establish a long-term relationship with the suppliers or the vendors, you should renegotiate the prices and not end up paying more every now and then.
- Evaluating Expenses
The small overhead expenses which the business n=might not even require add up and increase the expenses. Paying for unnecessary expenses that can be cut down is a very ignorant approach toward the business. Strategies and policies must be formulated by evaluating the expenses every now and then. The strategies need not focus on long term cost-cutting; rather they should focus on every project where the unnecessary expenses can be avoided.
- Get well-organized
The business needs to get well-organized and efficient in their day to day workings. Adopting intelligent strategies will be beneficial not only for collecting payments but also for cutting down the expenses. Installing accounts receivable software integration will help the business keep track of all the records. Systematically laying out the business process and working for it by collecting the payments and time and cutting down the unnecessary expenses will ensure success and growth.
- Billing and payment collection
The main reason for negative cash flow is the unorganized accounts receivable, which is caused by delayed payments by the customers. Many small to medium-sized businesses delivered their goods or rendered their services to the customers on a credit basis. The delayed payments on these services or goods cause an imbalance in accounts receivable. So a proper system and workforce is required to improve the accounts receivables and get the payments on time. These days automating the billing and collection process is being implemented by many businesses to ensure accuracy and effect working of the accounts receivable. Automating the process will be very beneficial as it will facilitate cost and time-saving. The apps and software used for the process are easy to access and are also affordable. Troveworks Quick books integration app is one of the most popular and efficient apps to help keep track of all the steps required to maintain the accounts receivable with a maximum degree of accuracy.
- Payment Options and collection
The business should opt for flexible payment options that are accepted and facilitate all kinds of payments. This way, the customers will have the convenience they want and will get encouraged to pay on time. Sending out reminders and keeping records of advances paid by different customers, all these details must have full focus. The software like ar integration for quick books will facilitate all the mentioned steps automatically and in a timely fashion. So the customers will have to pay on time.
- Sales and marketing strategies
After measures have been formulated and implemented to solve the root cause of the problem, the focus can shift to other important aspects. Increasing sales is another important factor for a business to run and function. According to the market trends, sales and marketing strategies have to change to get more customers.
Therefore, the businesses can adopt the measures mentioned above to increase the cash- flow and maintain their financial health. The company should focus on atomizing their processes by accounts receivable technologies and also make their functioning efficient. This way, they can achieve success and focus on growth as well as expansion.