How will I increase cash inflow in my business inspite of increasing sales?
That question I always ask myself when I had a small retail business. A new business owner, it is challenging for me because I felt I did everything but still no changes in my money. That is the reason I started a blog 5 years ago, my diary to know the game of a business.
Entrepreneurs always find ways of how to increase cash inflow because it is the lifeblood of a business. And some large company has a Treasury Department to track the expenditure of a business.
For a small owner like me, it is in the effectivity on how to avoid any losses.
Hello, it is me! Eileen, and welcome to my blog 🌸
This website specializes in how to start up the business for beginners and educate them to be financially independent
In my article cash flow, cash is a monetary value in coins and paper and it used for trading goods and services.
How to increase cash inflow to the business?
Create the Budget plan
To increase cash inflow, need to prepare the budget plan for a month.
In your plan, it includes your payments like utilities, and telephone bills; payment for a business loan, to your suppliers, or credit agents; premium insurances.
It also includes the estimated cash received from accounts receivable; cash sales for next month and the possibility doubtful accounts receivable.
Let’s take an example. You estimated going up your sales of P100,000.00.
You have a confident to pay your debt for P50,000 to lower your interest charge.
When you list the expenses, you are creating budget lists.
Track your Cash Outflow
It has two forms: the cash inflow and the cash outflow.
The Inflow is the incoming cash in which results in the positive flow of the company (samples are cash sales and interest earned). The Outflow is a transaction in which going out of the company such as purchases and payroll.
I will breakdown into four lists to track the cash outflow for the resulting increase in cash.
For business start-ups, you can tell your bookkeeper to categorize the outflow of the business. Create the chart of accounts and categorize the lists of expenses like the fixed expenses and the employee benefits.
•Prioritize from the most important to the least.
Once you categorize the lists of expenses, then prioritize what is the most important to pay or to purchase. The sample is the utilities (electric and water). This is the monthly payment, so you have to set aside the cash.
Make an option for an unnecessary expense, such as personal. It would help you increase cash for your business.
•Prepare the Expense Track Sheet.
An Expense Track sheet is a document you list all the expenses according to their category. You can prepare in an excel or google sheet for easy grouping the category.
You already know the expenses and the possibilities to avoid it. Next you have to monitor your cash outflow.
Credit offer to loyal customers
You need money. You want also loyal customers to coming back to your store. For a win-win situation, you can offer a credit to loyal customers and give an incentive for prompt paying.
They will help you increase your sales and you get more inflow on your business because of prompt paying.
To avoid any allowance for doubtful accounts, give only for your loyal customers only.
Create a marketing strategy
To create cash inflow, a good indicator is your cash sales. To gain more customers, create an innovation that surely customers satisfied with your products or services.
For example, you need to hire other staff for your catering business. You monitor your money have a sufficient balance. Why not hire knowledgeable in sales and marketing and give extra cash for another service he helps with your business?
Buy in credit when necessary and find the long-term credit
For start-ups, as much as possible, find a supplier to give you credit in the long term, especially if your sales are in season time. You do not worry to get money from cash reserves and you have time to revolve your cash sales.
Save money for Emergency Fund
Regardless of your business, entrepreneurs faced cash problems of how to increase it. Sometimes your due is near, do not know of where to get a fund.
It is advisable to save for an emergency fund while you still have money. This fund helps you to pay unexpected expenses in which you dislike to get from your cash sales.