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Timeless Steps To Improve Your Business Cash Flow
Proper cash flow management is crucial for SMEs. Here are some pitfalls you should be aware of and avoid them.
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Timeless Steps To Improve Your Business Cash Flow
May it be a large corporation or a micro SME, managing a healthy cash flow is vital to the sustainability, survival, and growth of any business. In theory, there are two types of cash flow, positive and negative. A positive cash flow happens when there is a greater cash inflow than the amount of cash leaving the business. While a negative cash flow occurs when the cash outflow is greater than the cash inflow.
At some point, a business may encounter a negative cash flow due to internal or external factors, usually due to a rise in operating costs or loss of investments.
To consistently maintain a positive cash flow, here are some steps businesses can take:
Most businesses already have these types of reviews in place, either yearly or quarterly. By studying your operating costs on a regular basis, you will be able to identify expenses that can either be cut out or reduced, thus decreasing the outflow of cash.
Moreover, you can take it one step further by performing a quarterly cash flow analysis. As you pinpoint your business’ income and expenses, there is room to improve and plan for a better cash flow in the next quarter. Subsequently, you may be able to identify and leverage opportunities in specific business areas to generate more revenue, while simultaneously trimming unnecessary incurrence of operational expenses.
As you have identified expenses that can be reduced, schedule an appointment with your trusted vendors and suppliers. Negotiate long-term partnerships, future projects, and better pricing terms for the benefit of both parties.
Take the opportunity to establish transparency with your suppliers to allow better communication as well as better visibility of their performance in catering to your business needs. This would enable you to streamline any costs and gain more value out of your partnership.
Apart from your current offerings, investing some time to research and develop new products or services can eventually turn into new sources of revenue for your business.
For example, if you are in the e-commerce business, offering better packaging or running occasional promotions could be a definitive way of garnering new customers and increasing revenue as well. For those in F&B, providing your regular customers with exclusive loyalty rewards can encourage frequent visits as well as word-of-mouth referrals.
SMEs may benefit from having a dedicated business bank account that allows them to manage business expenses, earn interest, and more. Check out how UOB BizCA+, a business current account benefits a business owner:
Like ourselves, vehicles, and our homes, your business needs protection too. Risks included in running a business include external factors such as burglary, fire, and damage that you should be prepared for to protect your business, employees, and ability to recover from the unexpected. Consider UOB BizCare, a comprehensive insurance plan for your business.
With these timeless steps to improving your business cash flow, there is also a need to make sure that your business operations are running smoothly and efficiently to complement these steps. Combined with a beneficial business current account such as UOB BizCA+ and a comprehensive insurance plan like UOB BizCare to protect your business and employees, these products could give your business the valuable financial breathing room to achieve a healthy cash flow.
Find out more about UOB BizCA+ and UOB BizCare here!
*The contents of this article do not constitute financial advice. Readers should conduct their research before making a financial decision.
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