If you have a business, you will know how important it is to have control over cash flow or, in other words, measure the cash resources generated by your company at a given time.
Cashflow is nothing other than the difference between collections and payments. So, as you will deduct, it can be calculated as the profit obtained by a company, adding the amortizations and provisions.
What is the importance of cash flow?
It seeks to calculate the company's financial resources to identify needs and to know if your business is capable of generating enough cash to meet its short-term payment commitments.
Poor cash flow management can cause problems that end in default of payments.
Strategies for optimizing cash flow
Below, I will show you some tips to optimize the cashflow of your SME:
Advance your collections
The first of the principles on which a good strategy for optimizing our cash flow is based is to trytry to get paid as soon as possible.
To be able to bill sooner and more often, you need to advance the period of deferred payments to your customers as much as possible.
Defer your payments
As you may know, the availability of cash is not only a matter of collections, but also of payments. For stability, it is just as important to charge your customers quickly, to pay your obligations as late as possible.
In this way, you will have a free line of credit without having to incur the cost of using bank financing to obtain liquidity.
The best way to achieve this is negotiating advantageous conditions with your suppliers.
Take advantage of the incentives offered for early payments
Although I told you that it is advisable to postpone payments as far as possible, it is also interesting to useuse the discounts offered by providers for prepayment. You always have to look for what's best for your business.
To give you an idea, 2% on a 30-day bill could be equivalent to a profit of 24% per year if that amount were invested.
Use an expense management platform
There are numerous expense management platforms, and not all of them are dedicated to the same thing. If what you want is to monitor the outflow of your SME, the expense management platform of Polaroo can help you.
Thanks to it, you will be able to see all the payments, consumptions and bills for supplies, you will pay the same amount for all your supplies And you will get to regularizeRegularize your cash flow, in addition to having the peace of mind to pay just enough for electricity, internet, gas, electricity, etc.
Make a budget
It seems typical, but it's not always put into practice.
It's very interesting to drawdraw up a budget to know where all your company's resources are allocated in order to avoid unnecessary or unproductive expenses.
How to prevent cash flow from being negative
As you may have seen, cash flow management is an essential variable to move your business forward, but depends on other factors other than your own management: your suppliers, customers...
Therefore, it is very important that keep all these variables under control to always ensure that your cash flow is positive. And above all, work on all the efforts in which you do have a direct influence, in addition to supporting yourself in tools that make it easier for you to control the cash flow of your business.
