Pay Off, Anticipate and Cap Expenses for Cash Flow Management

When you run a business, you have a number of day-to-day expenses which you have to make, such as rent, salaries, raw materials, entertaining clients, etc. Whenever you start some new venture in your business, you also have more expenses. And generally, these new expenses tend to be more than you had anticipated which can lead into a cash flow issue. Here are some tips for cash flow management that will help you with day-to-day expenses as well as expenses that only occur once in a while:

1. Pay Off Larger Expenses First: In a business, there are generally more expenses at the beginning of the month. Rent is generally due on the first, as are salaries. So it makes sense to pay off your largest expenses in the first few days and then move to the smaller ones. If you keep the bigger expenses pending, it’s likely to lead to more stress. Plus, it’s possible that the smaller expenses, which could have been avoided, will creep up and dig into the funds which should have been allotted to your overheads.
2. Anticipate More Expense: There are many new ventures in businesses, such as starting a new branch, switching up your brand, working with a new business partner, etc. When you’re coming up with a business plan for a new venture, you’re probably going to sit down and calculate how much it’s going to cost you. And the closer you get to executing your plan, the more the expenses are going to increase. So it makes sense to anticipate that the expense will be at least 25% more than you initially thought it would be. This way, you won’t run into a cash flow issue later.
3. Put a Cap on It: In a business, there are going to be certain “frivolous” expenses such as taking clients out to dinner, refurnishing your offices, having office parties, etc. Anything that isn’t entirely necessary to your business comes under this category. But, of course, it helps to make a good impression on clients by taking them out. It also keeps morale high when you keep your offices looking good. But be sure not to spend too much money on these expenses or it’s going to interfere with your cash flow. This is why it’s a good idea to decide how much money you’re going to spend on things like this at the beginning of the month/project. And then be sure not to go over that sum.

Contact us to learn about more ways in which you can manage the cash flow in your business.