As we know, cash flow is the money that enters and leaves the company for a given period. If it is not properly managed, liquidity will be affected and payment defaults will occur, thus generating a loss of confidence with suppliers.
Guide to improve the flow of a company's cash flow
It is essential to maintain a good cash flow, for this reason, we share with you some ideas that will help you to optimize it:
Improve the collection system
Looking for ways to manage differently the way we do collections can be positive, but it can also cause problems with our customers if the solution is too aggressive.
To have updated and reliable financial statements.
The basis of the cash flow is the company's Financial Statements, therefore, it is essential that they are kept in a correct and up to date manner, otherwise they will not be of much use for the construction of the cash flow. It is common in SMEs to review the financial reports two or three months late, but This practice is inadequate because it does not allow for forecasting cash needs in the short and medium term.
Proper inventory management
This aspect is relevant when it comes to cash flow management, especially in companies that sell products, so it is necessary to control inventory, know which products have a high turnover, which are sold faster and thus have more cash flow. Likewise, those products that cost more time to sell.
Diversify suppliers and customers
Concentrating on a few clients is a risk for the operation of a company, especially in terms of its sustainability, since revenues will be highly concentrated and if any client decides to terminate the contract or falls behind in payments it will affect the entire flow of resources of the organization.
It is also advisable to constantly evaluate suppliers, not only in terms of costs but also in terms of quality and compliance. Seeking new supply alternatives could generate benefits when negotiating the costs of the goods or services required, as well as payment terms.
Controlling expenses
When you are a small business, it is important to control how you spend your available resources. Invest only in what is a priority and necessary for the survival of your business.
