Cash flow planning is an essential process in any company - not only can it give peace of mind, but also ensure your business finance remains as stable as possible.
There are several factors to take into consideration when cash flow planning in order to keep your business afloat and manage any pitfalls that might come your way.
Drawing up a cash flow statement
The purpose of a cash flow statement is to forecast how much money is coming into and going out of your company. The easiest way to achieve this is to draw up an annual plan and split it up into monthly payments.
Small business owners should use this document to outline how much they expect to spend or receive over a given period.
For example, there are certain payments that will need to be met at specific times. Electricity bills might be sent out quarterly, in which case this is a three-monthly expense that needs to be outlined in your plan.
Meanwhile, rental payments might need to be made monthly and your insurance premiums could be paid on a yearly basis.
No matter how frequently these costs need to be met, make every effort to include them in your business cash flow planning to avoid any nasty surprises further down the line.
Make allowances for unforeseen expenses
Business owners need to ensure they have money set aside to cope with any unexpected expenses, otherwise this could have an adverse impact on their cash flow.
It might be that a large piece of machinery needs to be repaired or replaced, or that you suddenly have to move premises.
Knowing there are allowances in your budget to meet these costs is important if your organisation is going to remain above water.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].