A lot of businesses fail due to mismanagement which leads to huge losses and their companies running out of cash. Some struggle because they need a positive cash flow for their business to run smoothly. Therefore, you need to have a good cash flow plan at all times.
Here, one of the best financial advisors on the Gold Coast shares some tips on how to create a cash flow plan for your business:
Check Monthly Bank Statements
You need to check your bank statements every month. This will help you identify trends in your business. A sudden rise in your account receivables or a sudden drop in money you have in the bank can be a sign of low cash flow.
Understand Those Cash Flow Statements
Cash flow statements are usually an indication of how well your business finances are. Your business cash flow statement can tell you a lot of things that can help you determine whether or not you can successfully manage your finances. A cash flow statement tells you whether or not you control your company’s finances.
The Cash Flow Statement should include:
- Cash from operations
- Cash from investing
- Cash from financing
- Brought in cash
- Spent cash
- End cash
- Balance of cash
Create a Projected Cash Flow Statement
You need to create a projected cash flow statement. It can help you determine how much money you will need to make the budget work. You need to determine how much money you will have in the bank at the end of the month to make the budget work. A projected cash flow statement is an estimation of how much money you will have in the bank at the end of the given month.
Collect account receivables ASAP
If you have any accounts receivable on your business, you need to collect them as soon as possible. You need to have enough cash on hand to pay your suppliers and vendors. If you don’t have enough cash, you might need to get business loans to keep your business running and to pay off your creditors.
Get Extended Credit Terms from Vendors
If you have vendors giving you extended credit terms, you need to pay them off as soon as you can. If you have a business loan, you need to pay it off as soon as you can to get rid of the debt. However, it is best to take the credit terms that your vendors offer you. You can extend the time the vendor gives you to pay off the money you owe. The term of your credit period should depend on the situation of your business. The longer the period, the better it is.
Conclusion
Whichever the situation of your business is, you need to have a good cash flow plan. Whether you need cash for a loan to keep your business running or to pay your suppliers, you need to have enough cash to get the job done.
Making sure you have a good cash flow plan is important in your business. You need to have enough cash on hand in order to have a positive cash flow. If you plan your cash flow, you should have no problem running your business smoothly.
Ideally, you need to seek financial advice from reliable financial advisors so that you can get good financial advice that is right for your business. The financial advisor can help you create a cash flow plan that is right for your business. If you are looking for financial advice, here is one of the best financial advisors on the Gold Coast.
New Wave Financial Planning can provide you with cash flow planning on the Gold Coast. Get in touch with us to know how we can help your business with our sound cash flow planning strategies!
