How To Manage Your Cash Flow Gaps!
Business owners, do you ever feel like you're always chasing your tail when it comes to money? You're not alone. In fact, most businesses go through ups and downs in their cash flow.
These "gaps" can be caused by a number of factors, including seasonal sales cycles, delays in receiving payments, and unexpected expenses. While it's impossible to completely eliminate cash flow gaps, there are steps you can take to minimise them. Here are three tips:
1. Know your cash flow cycle.
This refers to the time between when you make a sale and when you receive payment. For example, if you sell a product on credit, there will be a lag time between the sale and when you receive the money from the customer. The first step in minimising cash flow gaps is to understand your typical cycle so you can plan accordingly.
2. Speed up income.
There are a couple of ways to do this. First, if you offer credit terms to customers, consider shortened terms or requiring prepayment. This will help you receive payments sooner. Second, look for opportunities to increase prices or offer additional products and services that generate more revenue.
3. Slow down payments.
Of course, speeding up income is only half of the equation—you also need to slow down payments on your end. One way to do this is to negotiate better terms with suppliers or take advantage of vendor discounts for early payment. You can also explore financing options that allow you smooth out your cash flow or to spread out payments over time.
Cash flow gaps are inevitable for most businesses—but that doesn't mean they have to put a strain on your operations. By understanding your cash flow cycle and taking steps to minimise the impact of these gaps you can keep your business running smoothly.
Finding it a challenge to manage your cash flow? Let's talk!
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