6 ways to avoid Cash Flow problems before they become a huge problem

Detailed cash flow analysis is one of the key financial indicators that any entrepreneur needs when conducting business. The reason for this is that it allows an entrepreneur to identify, analyze and quantify the positive and unfavourable factors influencing the company’s financial performance.

Financial mismanagement and inefficiencies can have a direct impact on your business, so it’s important that you have the right tools in place to increase cash flow and manage your finances. In this blog article, we present 6 best practices for you to control your company’s cash flow efficiently.

1

Price your products/services correctly

Pricing your products correctly can help increase your company’s sales. Although it may generate a positive or negative impact on your customers. But if you have to do it, do it. When pricing your product/service take into consideration the competition’s price, your operating costs and the desired profit margin.

2

Renegotiate debts with banks and suppliers

In a time of financial difficulty consider contacting your bank and suppliers to renegotiate outstanding debts. For example, ask for extra time to pay the instalments and try to lower the interest rates.

With everest, you can pay the expenses at the end of the month and extend the repayment period if necessary. everest helps you better manage your cash flow through deferred repayment and offers a grace period of 35 days, so you can repay your balance in full at the end of the month without any fees or extend the repayment period for up to 45 days.

3

Reduce unnecessary expenses

Examine your operating expenses to see if any can be reduced or even eliminated. For example, make sure you’re not overpaying for an input that could be obtained at a lower price from another supplier without losing quality. This helps both avoid and reverse negative cash flow.

4

Create an emergency reserve

As we have seen, expenses can pop up unexpectedly and instantly affect your cash flow negatively. So it’s important to set aside some money to cover any sudden costs. To set this amount, consider the events of the last few years.

5

Record all information constantly

If you do not regularly record the inflows and outflows of your cash flow, you will hardly have accurate information about the real state of your company. This way, you may think you are operating in the green, when in fact you are not, and end up running up more debt. So record all information constantly.

6

Keep your cash flow organized

In addition to recording all incoming and outgoing payments, create a chart of accounts grouping the different types, and then detailing each one to keep cash flow control organized. This will help you understand what needs to be improved, such as which group of expenses are causing cash flow problems.

With everest you can organize business expenses by categories thanks to tags and comments. You will gain visibility and you will know in which category the expenses are the most important. Use technology as an ally of your business

Without a doubt, cash control is essential for any business. Therefore, avoid errors that can end up damaging it and, consequently, leaving your cash flow negative.

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