words Al Woods
The society that we live in is gradually inching towards becoming a cashless society. Most businesses, irrespective of their scale, and households have started resorting to technology to go about transactions.
This is a welcome change as this reduces human beings’ dependency on physical cash. However, all that said and all things done, what cannot be refuted, is that cash shall always occupy a pivotal position in our lives. We could have a hoard of technology at our disposal yet find ourselves gravitating back to cash time and again, and under different circumstances. Cash is irreplaceable and shall always be so. The pandemic has brought to light the role cash plays in our lives. We need cash for emergencies because technology might fail to step in when needed the most. Technological glitches are a common phenomenon, and it is cash that shall always come to our rescue when our smartphones and tens of thousands of apps fail. Without unhindered access to cash, you can neither manage your household nor your business.
The pandemic has shown us how dependent we are on cash. Millions have people have lost their jobs and found themselves unable to feed the mouths that depend on them; let alone pay bills. Therefore, it is important that we learn some effective cash management tips so that we can manage our cash flow. All the payment apps that we have shall amount to nothing if we are unable to manage our cash flow. On that note, let us now look at a few of these ways in which businesses can manage their cash flow in these disruptive times.
Manage the Inflow of Your Cash:
Unless you have ensured that you have a steady inflow of cash, you cannot come up with effective cash management strategies. Let us see how we can manage our business’s cash flow in this section of the article.
The first factor that you must look into is your business’s revenue generation. Ask yourself a few questions. Are you generating constant revenue for your business? Is the revenue enough to sustain yourself for a few months? What are the ways in which you can improve your business’s revenue? These are a few ways in which you can gauge your situation and then do the needful. Having answered these questions, the next thing that you must do is find alternate ways to garner revenue for your business. Most businesses have remodeled themselves to stay afloat and make enough money to get by. They have branched out into making masks, hand sanitizers and personal protective equipment. Restaurants have started selling groceries as well. Therefore, see if you can branch out in different directions so that people feel the need for your business even during the pandemic.
The second thing that you can do is build a strong online presence. Most businesses have started operating online so that they can reach out to their customers. With seamless and more efficient delivery options, businesses are trying to keep their influx of customers and clients. Some of these businesses are even providing discounts and coupons so that more people can resort to their services. Once you have resorted to these few tips and techniques to raise the revenue for your business, you can see to your business’s cash outflow.
Managing the Outflow of Your Cash:
In this section of the article, we shall look at the ways in which you can manage the outflow of your business’s cash. Now that you have successfully managed the inflow of your cash and come up with ways that will help your business enjoy a steady income, it is time to pay attention to the outflow of your cash. Earning well enough for your business without managing the amount that flows out of your business shall amount to nothing but loss. All your expenses must be analyzed and reviewed meticulously so that you know where you are spending. You must cut down in the areas that you feel do not require much spending. For instance, your travel expenses can be reduced, the amount you spend on luxury items for your business can also be investigated. It is also essential that you manage your accounts payable. Ask your suppliers if they could allow you to defer payments for purchases that are still unpaid. Some suppliers have also been offering concessions on payments and cancelations around this time, so you might want to explore that option.
Another area that you need to analyze to save up costs and manage your cash outflow is capital expenditures. Things that are absolutely important, like office equipment and supplies, must be made visible in the cash forecasting and cash distribution strategy before anything else, and before any other purchases are made. That shall help you understand and predict how much cash you need and how much you can save up on. It is also essential that you review and reduce your inventory levels. Review the number of days of supply you have at hand and try to cancel your purchase order quantities. You must also review your return privileges so that you can see to it that you are not spending anything that is not required. This strategy shall help you cut corners and manage the cash outflow of your business optimally. Reducing your inventory shall help you reduce costs in a number of areas like storage and handling.
Summing it Up:
The bottom-line of this discussion is that cash is everything! Our survival depends on cash, and that is why it is important that we come up with ways to manage the same. No one can predict a pandemic or global financial outage. No one can predict when the market shall crash or recover. Therefore, leaving everything to fate and predictions shall only mean doom. If you are to wade through a period of crisis, it is essential that you resort to efficacious cash management strategies, so that you have enough support to fall back on and stay afloat.