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Cash flow

5 reasons why you need a cash flow solution for your business

February 28, 2023
5 reasons why you need a cash flow solution for your business

Cash flow is one of the most useful tools an entrepreneur can use to always know where their business is financially speaking. If you want your business to have better and better results, you need to closely monitor the money coming in and out of your business.

With over 82% of businesses failing due to cash flow issues, making sure you have positive cash flow is just as important as profit when it comes to determining your business’s performance.

Have you ever wondered why it is so important to have a cash flow plan at hand? Well, there isn’t one answer only. The truth is that it all depends on the situation and the context you are in, but if you want to grow your business and make decisions based on real data, not just intuition, the cash flow plan is the solution you need.

1. You need a clear and realistic picture of your financial situation

It is important to always know the financial reality of your business. In this way, you can see the monthly fluctuation of all inflows and outflows and quickly notice any irregularities that may affect the business. If you also use a solution specially created for cash flow management, you have the benefit of accessing real-time data whenever you need it.

2. Get better control over your spending

In addition to the fact that you always know how much money you have available to pay your expenses, a well-defined cash flow plan also gives you a very clear structure of them. As an entrepreneur, it’s vital to figure out where your money is going and why.

You can create a personalized structure starting with the recurring payments you know you have to make every month at a fixed interval (rent, utilities, salaries, contributions, etc.), then you can continue with variable expenses such as advertising costs, sales costs, or taxes. Pro tip: if you use ThinkOut, you’ll have access to a category structure for inflows and outflows that you can use or customize at any moment.

3. It is necessary to know where you are going

Financial planning can give you the big picture of what’s going to happen in your business. You’re no longer caught by surprise every time something doesn’t go as you expected, and you have time to prepare in advance. You set business goals based on real data, you have and provide transparency, you stay focused and better control the stress of the life of an entrepreneur.

Creating a cash flow forecast will help you know if and when you will have money available to pay your bills, suppliers, and other debts or expenses.

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4. You protect and improve relationships with business partners

One of the most common problems when it comes to cash flow is the lack of available funds to pay suppliers. If you find yourself in this situation, it can affect your partnership and your company’s reputation. To avoid this circumstance, you can discuss in advance with the business partners for a stagger; make sure you set favorable payment terms for both parties involved.

It is important to do advanced planning so that you are not faced with multiple debts at the same time, especially if you do not have the resources to pay them off. Remember, there is a very high chance that your stakeholders will appreciate you more if you manage the situation in time and want to continue working with you in the future.

5. Make better decisions for yourself and your business

Do you want more certainty for the business decisions you make every day? Monitoring operations will give you the insights you need, as well as more control over your business and confidence in its future.

For example, by using ThinkOut, you can track the profitability of each project or work point to better understand what types of decisions you need to make.

Whether you are focusing on your business growth strategy, or you just want to maintain a sustainable level of commercial activity, cash flow is the best indicator of your overall business performance.

To make things easier, read our articles on how you can manage cash flow using a solution that includes all the necessary operations and generates the reports you need in real-time.

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