Positive cashflow leads to success

Ensuring a steady cashflow is essential to your company’s success. Implementing effective controls over money coming in and money going out can help you generate substantial wealth.
The age-old statement “cash is king” has never been more true than it is now. Many businesses are profitable, but run out of money. The following are examples of situations that may lead to cash flow problems and precautionary measures that can be taken:
• Poor credit control: If you don’t get paid on time, you will in turn default on your obligations. You can counter this by having strict credit policies in place, and not being afraid to refuse work from large enterprises
• Order fulfilment: If you don’t deliver on time you will not get paid
• Plan your workload properly and only accept orders that you are capable of completing. Inform your customers in advance if you cannot deliver on time
• Ineffective marketing: This may result from ineffective use of marketing tools. Create a marketing strategy and plan to reach your customers effectively. Ensure your message is correct so you don’t attract the wrong kind of enquiries
• Poor cash controls: Having poor cash controls can be detrimental to your business, even if you think you have sufficient cash. Impose stringent controls on cash because it is an important survival tool
• Inefficient ordering systems: Systems should be user friendly and customers should be able to deal with you efficiently and not be subjected to complicated procedures
• Poor management accounting: Every business should be able to account for its activities. Proper record keeping leads to accurate accounting
• Inadequate supplier management: Suppliers might overcharge or take a long time to deliver stock. You need to create a system that will help you to manage your suppliers
• Poor controls of gross profits and/or overheads: Every business should develop its own pricing model and prepare budgets to ensure that overheads are kept within targets
There are many different situations that can cause cash flow problems, but these are the most common. Take steps to avoid these or have contingency plans should they come up.
Always remember that by building up a positive bank balance, you can trade effectively and expand your business. Manage this positive bank balance to earn

Here is a cashflow budget template to help you plan and manage your cashflow


One Response to “Positive cashflow leads to success”

  1. Mr chichoni i would a copy of how to start a business.i read about it in the press.i would appriciate your held

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