3 things to do in order to avoid a cash flow crisis
Cash flow is all your inflows and outflows being transferred into and out of your company for a specific period of time.
Why is cash flow so important for your business? Because it reflects the available cash in hand or the (most liquid) resources you can rely on for your current activity.
A cash flow plan properly organized and updated is a valuable decision support for entrepreneurs. Use it on a regular basis and it will become easier for you to avoid a cash flow crisis. Regularly refresh and check your cash flow data, add cash flow forecasts and maintain a close relationship with your business suppliers. Here’s why.
Cash flow monitoring
If you want to gain more control over your company’s financials start by monitoring and analysing your cash flow on a regular basis. You will better understand your daily business needs, the money movements happening inside your company and what are the main inflows and outflows categories for you.
But even more important, you will know what is your daily cash position and how it is influenced over time. By keeping an eye on your balance fluctuations you avoid costs generated by overdrafts, failed payments and the uncomfortable situations when you don’t have enough money to pay salaries at the end of the month.
Manual cash flow updating and analysis is a tedious process that you don’t have to do. In ThinkOut you easily connect your bank accounts and automatically import your daily transactions. No more Excel.
Cash flow forecasting
Businesses are sometimes forced to operate in an unpredictable environment. And it’s true that the pandemic is not making things any better. But one of the best ways to get clarity over tomorrow is to try to predict your future cash flow.
Cash flow predictions help you easily spot a future cash shortage which might generate a crisis. In this way you win time to prepare for it and to take decisions that might reduce its consequences, such as collecting receivables sooner, paying suppliers a little late or taking a short-term loan.
No clue where to start from? We got you. In ThinkOut it’s easy to add predictions about your business. We show your company’s future financial position and you take informed business decisions on time.
Solid business partnerships
Making sure you build business relations based on trust and mutual support will influence the way in which you avoid or get over a crisis. Work on solid business partnerships and it will be easier to negotiate terms, extend payment due dates or take out a short-term loan fast enough to avoid problems.
69% of small business owners face challenges regarding cash flow. You can avoid these headaches with the help of cash flow analysis and forecasting. We know these are not the most enjoyable tasks for all entrepreneurs. And that’s why we built ThinkOut, an easy-to-use cash flow management platform which helps business managers take decisions based on actual data.
Continue to read about how to organize your cash flow plan and how to build financial forecasts for your business.