Importance of Cash Flow and Budgeting
Number one cause of businesses failing is when they neglect to control their cash flow, cash in and cash out. Also as important, not having a budget contributes even more towards that inescapable business crash.
This is even more important when you are just starting, so a startups make your number 1 priority having a better and most effective cash flow management. Coming up with a cash flow management is actually not that hard, all it needs is making it part of your business management. After all, you entered your business to make money right?
So show me the money/cash.
Here are some good practices that makes the cash come in.
Send invoice through your accounting software just like QuickBooks Online. Also don’t be shy sending the invoice. Put it this way, we all need to east and have shelter and hence we need the money and need to get paid. As startups you may feel shy, snap out of this.
Actually, when you use the QuickBooks online to send the invoice, they do it systematically, they are not shy and best of all, you can actually start sending more and more. So on your dashboard, you will see the bars moving up each month.
When sending invoice through Quickbooks Online, you can opt for it to collect as well. This also helps your cash out, why? Well you don’t need to drive up to your client, chit chat, grab a cheque, go to the bank, wait in line, deposit the cheque. So not going through all these steps, means you saved time and money.
Make sure, you get paid on time. You can send reminders to clients. Also ask clients to pay by credit card and ask them to save it. This means when next invoice is issue, you get paid right away.
So send invoice through QBO, accept taking payments, save credit cards info into QBO , Send reminders through QBO.
Well, if your supplier invoice says pay within 30 days, pay on day number 30. Also, when making a purchase, whatever it is , ensure the purchase is giving you some kind of return, For example, QBO licence, it is a place where you definitely need to spend money on.
Speaking of which, most suppliers let you make money monthly payments, take advantage of those. What I mean ism let’s say you can buy a licence for 1000 in one shot or pay 100 per month, go with 100 per month.
Basically avoid huge cash out flow.
One of the best place that can help you is your budget and bank statements. Have a look at both:
- where the cash is bleeding the most,
- Can you avoid the payment?
- Can you replace with something less expensive?
- Can you barter for that service?
- Do you need it right away?
Analyse your budget and pay attention to each line items.
Cash is king and treat it with respect. This is where businesses succeed or fail.
2 great software that help with these are Helm and Budgeto.