09 Dec Your First Year As An Entrepreneur: How To Properly Manage Your Available Cashflow
What do you see as the proper management of cashflow for your business? Is it making sure that you have the available cash on-hand for any expenses and emergencies, or is it making sure that your customers or clients are paying you on time? Is the proper management of cashflow about knowing how to use your available funds properly and efficiently and investing it in assets and expenses that will help your business succeed in the long term? Well, the actual answer to the proper management of cashflow is really all of the above.
As an entrepreneur, it is your responsibility to make certain that your cashflow is managed in the best possible way. This is especially true during your first year of operations, because this is the time when you may be experiencing some ‘birthing’ issues and won’t have a very reliable source of income yet. The good news, however, is that with the right strategy, you can indeed make your cash flow and work for you.
How to properly manage your business cashflow
Create and develop the right financial forecasts
The first thing you should do as a business owner is creating and develop your own forecasts when it comes to your cashflow. The first forecast should include all your projected expenses for the entire year. You can make it easier on yourself by breaking down your forecast into months or weeks as well. Then, you should create another forecast for your projected income for the year. Use these two essential documents side by side, especially when you are making a plan for business spending. Constantly looking over these documents will also help you see if you are gaining (or losing) funds over a certain period.
Make a good plan for invoicing
Invoicing is a necessity that many new business owners fail to prioritise. They often make and send out their invoices at the last minute and, thus, receive the payments from their clients late as well. This cannot be stressed enough: you need to have a good plan when it comes to your invoicing. Make sure you are well-organised so you will eliminate the risk of getting paid late. And once you have sent out your invoices, make sure to follow up and chase your clients if necessary. Go a step further by sending out your invoices early – the earlier they are sent out, the earlier your clients can settle their accounts.
Be continuously guided by your financial forecasts
The cashflow or financial forecasts you make at the beginning of the year (or the beginning of your operations) should serve as a constant guide to you, especially in regards to making your decisions, big or small. Make it a point to refer to your forecasts and use the data in them to make well-informed decisions. You should also update your forecasts according to what happens in your enterprise. By referring to your financial forecasts, you can also make better decisions when it comes to cutting back on your expenses, becoming more efficient, or making plans for expansion.
With the proper management of your business cashflow, the availability of cash should not be a big issue. However, if you want to invest in certain assets (such as office machinery, equipment, and the like), then you can also take advantage of various services, such as asset finance (offered by cashflow specialists like Ultimate Finance). With the right management of your cashflow and the right assets, you can indeed go very far.