Whether you are owner of an established business or launching a startup, maintaining positive Cash Flow is important to ensure long term success. Positive cash flow in a business is a good sign of current performances and we always suggest entrepreneurs to regularly review their businesses’ cash flow statement so that you can preventive measures to avoid negative cash flow. To assist you with this, we have created a list of top simple yet effective tips to maintain positive cash flow in your business.

• Spend carefully

When starting a new business it can be appealing to invest all of your money at once to ensure your business gets up and running. However, it is vital to resist this impulse, because the ultimate success of your business depends on your ability to perform long term. If you invest all of your money in business launch, you place your company in a vulnerable position later on when an unexpected expense emerges. In order to maintain positive cash flow when launching a new business we suggest you to spend carefully and set aside a portion of your money for future expenses.

• Avoid late fees

Given your cash flow is healthy, you can easily save a huge sum of money on late fees by paying your bills on or before due date. Late payments not just affect your cash flow, but in the case of credit card fees, they also affect your credit score and increase your credit card interest. One simple solution to avoid late fees is to create automatic payments through your online banking account. Given you have enough money in your account, by allowing automatic payments you avoid late fees and timely pay your bills.

• Stay on top of receivables

If you want to maintain positive cash flow in your company, you should always ensure to manage your receivables carefully. This can be done by keeping a detailed list of what you owe. Time is of great importance when collecting overdue money, you should contact receivables fast and stock to a short payment time instead of a longer 60-90 day plan. Staying on top of your receivables is important to maintain positive cash flow in your business.

• Create a line of credit

Instead of rushing to your bank to create a line of credit when you don’t have enough cash, you should arrange it with your bank when your company is performing well and cash flow is positive. Banks will thoroughly check financial records of your business, before setting this up and will be more likely to more likely to agree if you have enough cash flow to pay back. They can also set a higher limit on your line of credit if you contact when your cash flow is positive.

Contact us to find out how our bookkeeping services in Indore, MP can help to streamline your financial processes and give you more time to plan your expansion.

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