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What Is Cash Flow And Why Is It So Important?

by admin on June 17, 2015 Comments Off

Many of the business owners have asked why cash flow is so important in a business. Actually, cash flow is the profit and expense of the company. Cash flow is noted as the lifeblood of all the businesses from different sources like customers, receipts of a loan, monetary values or interest on your savings account or stored in your accounting software. Cash is very vital because it will run your business. High percentage of cash flow and accounting services Singapore is even better because it will allow you to have investments like hire employees, open another branch, and eventually your business will expand. On the other hand, having a negative cash flow can result to more money paying out than those coming in.

Plan and Get Organized

Positive cash flow can be driven by two things: thorough planning and organization. Start at the cash you have in hand, this can be the money that you have invested in your business, may it be from the your savings account, loans that you have received or an investment coming from a partner. If you are just starting your business, then the interest in your cash flow is well timed. Make a list of the expenses that you have to pay.

Ways in Improving your Cash Flow

There are numerous ways for you to encourage your customers to pay their bills on time. You can issue them invoices promptly through the use of an accounting software and do a follow up call regularly. You can also offer them discounts for early payments and if you want to give them a thirty day term, a 10 days discount would be helpful. You can also provide them with payment structure if it’s a long project or schedule them for payment intervals.

The Smart Way of Paying Your Bills

It is your responsibility to pay them in a timely manner if you want to build your trust with your known creditors. For your cash flow to remain positive, experts recommend to use the payment and bookkeeping terms to its fullest. If you are given a thirty day term, then go ahead and use it. In that way you will be able to handle your cash flows better. You can also set an ETF payments. In this way you will be able to pay as soon as your due. Most importantly, build a professional relationship with your vendors. If they are going to trust you then it would be easier for you to ask for an extension or request.

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