Get Lucky with Cash Flow
You don’t have to be in Killarney to appreciate a good Gaelic hello. Especially considering the timing. But today is not just a day for leprechauns, green attire, and public intoxication—it’s a day for profit.
“The Luck of the Irish” isn’t just a phrase that your inebriated neighbor, Steve, bats around on St. Patrick’s Day—it’s a way of life. Unfortunately, not all of us are mythical fairies with a drinking problem and a penchant for shoes. And our “pot of gold at the end of the rainbow” is self-made.
Enter: Cash Flow. In order to make a profit, you need to be cognizant of your finances. And proper cash flow management is the golden key to making your own luck.
The Four-Leaf Clover
Cash flow management is not just an industry buzzword. It is an essential necessity for your company's survival. As a small business, your viability is largely tied to whether or not you can cover your operating expenses. It is imperative that you ensure your company has adequate cash flow to pay the bills and manage those financial ebbs and flows.
And unless a leprechaun is squatting in your house, the chances of finding gold in the ground is slim. Be sure to start your cash flow management by taking these three strategic steps:
1. Keep a record of your inflows and expenditures
2. Put processes in place to ensure your customers pay on time
3. Forecast your inflows and time your outflows — make sure you’re covering all your crucial expenses
The End of the Rainbow
With cash flow and profit, it falls on us to find that proverbial “end of the rainbow.” And to accomplish this we need to implement tracking. If you’re not properly tracking your cash flow, you risk having insufficient funds. And without sufficient funds, you can’t operate your business. Do you like electricity? Do you like water? Do you like paying your employees on time? All of this rests on having the right amount of cash.
And a cash flow management plan is the way to ensure this. With a plan in place, you’ll always know that there is the available, correct amount of cash to make your necessary payments. You need electricity! You need water! You need to pay your employees on time! And if you don’t, not only will your reputation suffer, but you’ll be opening your business up to something much worse—bankruptcy.
‘Pot of Gold’ Profits
A pot of shimmering gold is an enticing image for pretty much everyone. But what does this “pot of gold” translate to in the business world?
Profitability is yielding financial gain, and what business owner doesn’t want that? By being on top of the cash inflows your company receives (or the lack thereof) it is easy to spot trends that you can utilize to your advantage. For example, if customers are not paying on time, you can catch the discrepancy and correct it by whatever means necessary.
And, when you accurately manage your cash flow, you’ll accurately manage your payables. You’ll have more options with the payment terms your suppliers and creditors offer you and ultimately gain more flexibility.
Cash flow management is simple with an automated solution. Sure, you can attempt to track it manually, but that opens your business up to errors and discrepancies in your data. Digitizing allows you to easily key in your expenses and even offers a timeline of these account entries. You will be able to see what your cash flow looks like on any given day and forecast it far into the future. You can also use cash flow management software to identify opportunities, like offering customers discounts for early payment. With an automated solution, your company's bottom line will thank you!
Green is good. And no one knows that quite like the Irish. It’s time to celebrate, catch a leprechaun, and find that gold at the end of the rainbow.