Businesses need to be competitive and fiscally strong in order to survive
, and it is only through carefully considering several key areas of financial planning that any business can hope to achieve this. These critical areas of financial management may seem obvious when pointed out, but many business people still make silly mistakes in these areas or worse still overlook them entirely.
Cash flow Projections- Even the most inexperienced of business owners has probably understood the vital need for good cash flow long before starting their enterprise, but keeping cash flowing without the nightmare that a cash flow crisis can bring is nothing more than a matter of good planning. Every business should be making regular cash flow predictions that detail all cash expected in to the business from sales and other income and all anticipated outgoings of cash such as expenses and other payments. Regular cash flow forecasts of this kind allow a business to stay ahead of the game by giving it the opportunity to arrange finance in advance of any looming crisis.
Payment Management- For most businesses invoicing for payment is standard practice; for every customer sent an invoice, one will probably be received from elsewhere for supplies etc. To get the best from your cash flow it is wise to make good use of any terms offered, paying an invoice immediately might seem honourable, but it will mean that the cash used to pay it will be helping the supplier's cash flow and not your own. When a supplier gives a business 30 days to pay, they are allowing 30 days to receive payment, so it is always good practice to use this time.