Looking to improve your business’s cash flow?
(Aren’t we all???)
I’ve got a quick one today, spilling the beans on 3 game-changing actions to supercharge your cash flow when it’s playing hide-and-seek with your profits.
1. Understand Your Balance Sheet
Begin with a fundamental aspect of finance: the balance sheet.
(P.S. Check out my past blog posts how crucial this balance sheet really is: Part 1 Part 2)
You don’t need to become a financial expert, but understanding two key components is vital – your bank accounts and credit cards.
Ensure that your trusty bookkeeper is diligently reconciling these accounts each month, sealing up any leaks or sneaky discrepancies.
Regularly inspecting these reconciliations is like giving your cash flow a health checkup.
You want to make sure your bank’s version of your funds matches what your reports are telling you.
2. Scrutinize Your Expenses
Expenses have a funny way of creeping up on you, like a surprise birthday party you didn’t ask for.
Peek at reports from your bookkeeper and ask for the juicy details – like expenses, by vendor.
You might uncover ancient subscriptions, unused software, or services that are practically stealing from your wallet.
By tossing out unnecessary expenses, you’ll uncover the true essence of your business’s profitability.
It’s like decluttering your financial closet!
3.Track Cash Movements Beyond the Profit and Loss Statement
Here’s a mind-boggler – being profitable doesn’t automatically translate to having stacks of cash lying around.
(Welcome to the world of accrual-based accounting, where money moves in mysterious ways)
Get to know your accounts receivable (the money your customers owe you), accounts payable (how speedily you pay your bills), and those nifty inventory payment terms.
These are the hidden heroes of cash flow.
Monitoring these cash flows helps you anticipate and manage potential cash flow issues.
Your business’s cash flow is the lifeblood of its survival.
Take control of your finances and watch your cash flow thrive!
Bridge the gap between profit and cash flow; get cozy with your balance sheet, dissect your expenses, and follow the cash movements that might not be hanging out in your profit and loss statement.
