Richard Branson once said, “Never take your eyes off cash flow because it’s the lifeblood of business.” It is a simple but effective quote. If businesses lose focus on what’s going in and what’s going out, the circulation will stop soon enough. Making money will not be enough to keep the circulation going if cash flow is the problem at the heart of the company
Financial management is the key to survival before any grand plans and great ideas can be implemented. So how to achieve this? There are a number of core tenets that demand attention. One of the most important is secure payments.
Protection of Business Checks
Regardless of whether your business check type is manual or computerized, it is something that should be addressed given the potential risk of fraud.
Sending checks in the post has been a traditional practice for decades but this is increasingly prone to “check washing” where fraudsters can manipulate details. Prime technology now can safeguard this with tamper resistant coating and watermarking.
Best technology practise also uses encryption to ensure that the payment from a customer during transmission and storage cannot be corrupted. Multi-factor authentication such as a combination of password, PIN and biometric validation means that transactions will be protected from fraud.
Tracking of Cash Flow
It is an ongoing process of revision, renewal and research to see if compliance and costs are being addressed. Cash flow should be tracked systematically over standard reporting times, while credit terms in each contract should be studied carefully. Late payments can be a headache for projected incomings so it’s important to ensure clients have healthy financials too.
Software Packages That Can Integrate With Business Budgets
Business budgets are essential in mapping out the: what, why, how and when of money management. There are many software tools for budgetary requirements that help streamline the approach. The best of these packages are able to pull out real data from across the organisation to eliminate the need for different spreadsheets. This means that rolling data, forecasts, spend patterns and other key information can be integrated with the tool.
Using Financial Experts And Accountants
As the industry picture changes or the company financials fluctuate, the ability to be agile and forward-thinking is crucial. Accounting experts and financial advice should be consulted to make sure that market opportunities are exploited, there are no holes in cash flow and legal procedure is followed.
This will have a key effect on the business credit score, directly influencing the ability to secure loans or investment. The pursuit of trade credit and funding options with good interest rates can be the difference between expansion and stagnation.
Keeping Customers Front And Centre
Customers want a close and cost-effective relationship whatever the internal workings of their business provider. It is important for companies who have built a loyal base to understand that money saving starts with retaining their clients first and foremost. It is demonstrably true that looking for new clients to replace lost business is a far bigger expense.
The management of money in a business is the most important aspect of survival. Making sure suppliers are paid and clients pay on time is just one part of the equation.
A Proper Business Plan
There has to be a proper business plan to ensure how much overheads will be. Will the rent stay at the current rate? What does a growth plan look like? While estimates are not an exact science and dynamic situations will happen, there has to be realistic projections when managing the finances. Revenue and profit may go up and down, but cash is king.
Rachel Cruze, a personal finance expert says: “The bottom line is it doesn’t matter how much money you make; it matters how much you keep.” While the eyes are always on new business, it’s important to keep managing that bottom line.
