Tips to increase the cashflow of your business

Tips to increase the cashflow of your business

Cashflow is the amount of capital that a company is being able to generate in and out of the company. Whether a company is being able to generate value for the shareholders or not is defined by its ability to maintain positive cash flow for as long as it can.

Three forms of cashflow,

Operating cashflow:

The capital that a company can generate in its revenue cycles through its business activities.

Investing cashflow:

The amount of capital that a company invests in buying assets and investing in other business ventures.

Financing cashflow:

The capital that is being used to make payments by the company and the cash generated from the issued debts.

There are a few other methods to increase positive cashflow:

  • Cut down on your operational expenses
  • Improve your inventory
  • Streamline business process and save time to increase productivity
  • Invest in technologically for latest equipment and inventory
  • If needed, liquidate your dead inventory for cash
  • Use High interest savings account to park the cash

Set Financial benchmarks

So, there is a limit to the expenditure no matter how much your profit is rising and once you set a financial goal for the month/quarter/year, the benchmark monetary profit will be sealed and the cash-goal will be recorded.

Maintain a stable ratio of net vs. gross margin

The gross margin coming into the company are all the monetary assets being recorded without the monthly operational investment and payment of debts being taken out of it. Net margin is the cash in the company’s account after all the operational expenses and other financing-based-capital investments are taken out of it.

Finally Expand your sales market and make more avenues to welcome incoming cashflow

Edward Powell