Everyone knows that cash is king when it comes to dealing with the financial management of any business. However, many growing companies find it hard to balance between making payments and understanding when to collect it. This delicate balance is known as cash flow management.
It is important to note that managing cash flow isn’t difficult as there are many ways to about doing it. The best way to keep track of both payables and receivables and make smart decisions about the business cash flow is to outsource to a firm offering accounting bookkeeping services in Singapore. We ensure that when it comes to the financial management of your business, you won’t have to worry as we have experienced accountants who are ready to solve any problems that you might run into.
Here are 4 excellent tips for Singaporean businesses to manage their cash flow.
1. Maintain good books
Proper bookkeeping is a requirement for financial management. It is even more vital when it comes to managing cash flow. Without good bookkeeping, you may not know what to expect or know about any due payments. Failure to make payments can rake up in debts and cause lasting damage to one’s creditworthiness.
You should be firm about the following metrics and ensure they are always up to date:
- Invoices issued (accounts receivable) and payments received
- Invoices received (accounts payable) and payments made
- Taxes withheld
To ensure that your bookkeeping is maintained and updated regularly, consider reaching out to a firm offering corporate accounting services. We offer award-winning financial services that can ensure your business bookkeeping is maintained regularly. Rather than managing the financial aspects alone, tap on our years of experience to help you make this process easier. Our goal is to ensure that your business can compete in your market and industry, doing so through regular financial reports, market analysis and risk analysis that are essential for your business.
2. Improve receivables
Do you often receive payments immediately after making sales? While instant payments are excellent and efficient, it is more realistic to expect that you would have debtors to pay off.
When debtors hold most of your cash, you are likely to experience cash flow issues in your business. Outsourced accounting firms can help you to keep track and flag overdue debtors. However, this may not be the only issue that could be ailing your receivables. It could also be an issue stemming from slow-moving stocks.
When cash is held in inventory, you need to come up with ways to speed up the turning of goods into cash. You can consider strategies such as:
- Offering discounts to encourage rapid payments
- Introducing deposits at the time orders are made
- Performing credit checks on non-cash customers
3. Manage payables
Receivables are essential, and rising sales for your business is a strong indicator of growth. However, you should not let it deceive you. Along with growing sales, your expenses could skyrocket as well. Here are a few suggested ways to maximise the cash you are supposed to pay:
- Take advantage of creditors’ payment terms. If a creditor allows a window of 90 days for payments, you don’t have to rush payment on the 10th day
- Negotiate for flexible payment terms with your suppliers
- Consider discounts on early payments. Are the savings worth it?
- Choose suppliers not just on a price basis but also consider payment terms
4. Forecast smartly and plan for the shortfalls
Managing cash flow is not just about payables and receivables in the present moment. You should also forecast and plan for shortfalls in the future. Having a SME accounting services firm ready to help you solve any future issues is important. They can collate information from sales and receivables and compare it alongside expenses and payables. Using all of this information that you have gathered, you can start to forecast your cash flow status and strategise well for incoming shortfalls.
Financial management is a critical aspect of managing your business. Seek help from outsourced accounting firms to ensure that you can take the worry off your back and focus solely on your business.