Every startup has an end goal that involves growing its profits. But without a positive cash flow, you can run out of money really fast. However, you can manage your startup cash flow the right way from the start. Here are some tips to consider:
1. Plan and Track
To reduce the possibility of running out of cash, it’s vital to track all the money that is going in and out of your startup. Get this done by leveraging reports for tracking your expenses and income on a weekly, daily or monthly basis. Monitor every expenditure you make, and plan for unexpected situations. Consider using a reporting tool with a dashboard that can help you with tracking and monitoring your when you receive payments and other cash flow activities, including, such as IntegraPay’s Xero+IntegraPay payment solution for reconciling accounts and automating payments.
2. Only Order What You Need
Instead of overstocking on products, manage your inventory by purchasing only what you need. This principle also applies to supplies for your office, such as desks, chairs and computer equipment. These items do not generate cash and can reduce your cash flow easily.
3. Be Disciplined With Debtors
Collect your payments on time. There should be no exceptions to this rule, because the moment you start collecting late payments, you put your business at risk for experiencing a negative cash flow. Moreover, you want to set the correct expectations for your customers by encouraging them to pay on time. You can accomplish this by leveraging business payment solutions that facilitate automated payments. For instance, IntegraPay’s recurring payments help you to automate your payment collections process by enabling you to debit your customers’ on schedule. By setting up recurring payments, you don’t have to worry about chasing customers for unpaid invoices or bills. You can also better predict what to expect for cash flow in the future.
4. Renegotiate Payment Terms With Suppliers
If your payment terms aren’t in your favor, then it’s reducing your cash flow, and it’s time to renegotiate. Consider when you’ll receive income from accounts receivables and realistically assess whether or not you can afford to pay.
5. Reinvest Profits
Part of managing your cash flow calls for taking on activities that will help to increase your profits. Set aside money for expenses to help grow your business by reinvesting your profits.
Managing a startup calls for being diligent with the flow of your cash. By having a plan for managing your money, you can improve your startup’s cash flow management.