
Tips on how to control your Cash Flow
Cash is your businesses super power and in order to operate efficiently and effectively while accelerating your business growth you must maintain a positive cash flow always.
Below are a few tips that will guide you along the way:
Get clear on the cash outflows in your business.
This means the when, the how and why to every penny that is leaving your business. Also determine the R.O.I ( Return on Investment) of the expense before you make any purchase. Is the outflow needed in the operations of your business or is it just a money wasting outflow? Get CRYSTAL clear on every single coin that is leaving your company.
Operate on 80% or less of your revenue.
Assuming your business earns a monthly revenue of Kshs. 100,000 you can not spend more than Kshs. 80,000 on expenses. Set a cap on how much you should spend per week or per month in your business. Put the extra Kshs. 20,000 in a separate cash reserve for your business.
Set spending caps for each category
Let’s say the categories for your business are Inventory, Operating and Marketing expenses further break down the Kshs. 80,000 mentioned earlier. e.g 50% on Inventory, 30% on Operating expenses, 10% on Marketing expenses and 10% on miscellaneous.
Hire a Finance Manager
They will hold you accountable and provide insights and oversight on how you will achieve your MONEY GOALS. They will make sure that you that you don’t exceed your allocations and provide an accurate, reliable and timely Financial Management System. On top of that they should be able to dissect that information and provide you with strategies that will help you increase Revenue, CashFlow and generate Profits.