Tips For Managing Cash Flow During The Summer Season
As the summer months go by, many business owners may observe an increase in sales, especially those who have businesses in the hospitality industry. So, for some entrepreneurs, this can be an excellent time for their businesses to grow and expand. However, it can also be a challenge to manage cash flow, so we put together a list of tips and tricks that can help you and your booming business.
Start with a cash flow forecast
This will help you to see how much money you expect to come in and go out over the next few months. It will also give you a better idea of how much cash you need to have on hand to cover your expenses. Build your forecast starting with the data you have at hand, meaning the inflows and outflows from the same period last year, but also take into account the income you had in the past 2-3 months. You can use a simple formula, such as total sales revenue so far / number of months so far.
Automate your cash flow analysis
There are many tools that can help you automate your cash flow management process. Using a solution like ThinkOut can help you gain real-time visibility into your company’s performance and also free up your time so that you can focus on other aspects of your business.
Invest in inventory management
If you are selling products, make sure that you have enough inventory on hand to meet demand. However, you have to avoid overstocking, as this can tie up your cash. If possible, negotiate with your suppliers some terms that can be favorable for both parties.
It can be easy to get caught up in the excitement of the summer season and start spending more money than you can afford. However, it’s important to stay disciplined with your spending so that you don’t end up in debt. On that note, make sure to be prepared for unexpected expenses. Even if you have a good cash flow forecast, there may be unexpected expenses that come up during the summer months, like having to hire more than 1 or 2 people to keep up with the workload.
Plan for growth
If you are expecting your business to grow during the summer months, make sure that you have a plan in place to manage the increased cash flow. Take into consideration hiring additional staff or maybe investing in new equipment, depending on your activity. Also, you can also start planning for the months to come, when your activity and your revenue might start decreasing.
By following these tips, you can help ensure that your business has enough cash flow to handle the increased demand during the summer months. Don’t forget to enjoy your success and take some time to celebrate your accomplishments.