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Cash flow management

In its broadest term, cash management refers to the collection and redistribution of a company’s finances. 

Cash management is an important strategy for any business owner; taking proper control of a company’s finances will help to fund the day-to-day running of the business, prevent outstanding debts mounting up, and reduce the risk of insolvency. 

Stephensons is a leading business law firm, with many years’ experience of advising business owners on cash management practices, helping them to properly manage their company’s finances, and stave off the threat of insolvency in struggling organisations. 

For expert, impartial advice about the best cash management practices for business owners, from a team with years of legal experience, get in touch with Stephensons, by calling 01616 966 229.

 

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Tips for business cash management

  • Make realistic estimations of your business’s cash needs on a daily, weekly and monthly basis, and set your budget accordingly. It can be tempting to overspend sometimes, but ensure you stick to your budgets as best you can. Communicate this clearly with your bank manager.
  • Offer a variety of payment methods to your customers - credit card facilities, and online payment services such as PayPal, are vital for boosting cash flow. Early settlement incentives such as discounts can also encourage customers to clear their invoices in good time.
  • Invoice a client or supplier as and when a job is completed, rather than waiting till the end of the month to send invoices for all of the preceding month’s work. 
  • Always monitor which payments are outstanding, and send firm reminders to these clients about their payment obligations; if not yourself, assign these responsibilities to an experienced, reliable employee within the company.
  • Credit avenues, such as business loans and overdrafts, are a viable short-term solution for when cash flow is slowing down. However, this should not be seen as a long-term cash flow solution, and you should not let your company fall into the position where the day-to-day running of the business is reliant on these credit incomes. 

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