Solid cash flow management practices are the difference between a business that closes only after a year and one that experiences continued growth for years to come. Take a look at a few tips that will improve your company's cash flow management.
1. Use Historical Data to Project Cash Flow Needs
Understanding your cash flow needs for your business is the key to growth. Every industry experiences periods when there are highs and lows. These seasonal changes can leave your business without proper funding if planning is not done in advance. Historical data allow you to look at the times throughout the year where cash flow is high and when it is low. Using this information you can strategically plan expenses around these periods to avoid a cash drought.
2. Control Your Variable Costs
Improving cash flow management is all about controlling your costs. Variable costs are often riskier than fixed costs since variable expenses change from month to month. This makes it difficult to create a projection that is accurate. If you have the ability to turn your variable costs into fixed costs, then this makes it easier for you to plan your financials.
3. Collect on Overdue Accounts
Accounts payable are common in the transport business and give you the opportunity to expand your customer base. However, this becomes an issue when all of your cash is tied up in these accounts and many of them are well overdue. Set up the terms for payment but also take time to collect payment. This often takes time and multiple calls but the money can be used to continue to grow your business.
Share in the comments your tips for improving cash flow in your business.