Cash flow, also known as liquidity, shows the extent to which you as a business owner can meet your payment obligations. This actually equals your bank balance plus your incoming payments, minus the payments you still have to fulfill. With these tips, you can improve your cash flow!

Make a liquidity budget

A liquidity budget is an overview of all the expected incoming and exiting cashflows. Most of the time you draft this overview every quarter of the year. To make this overview of the incoming cashflows use the information of the incoming flow of normal business activities, of investments and the flow of funding. By making this overview you create a clear view of how much cost you make when having a certain income. If this fictional number divers from your actual numbers you can determine that you have a problem with your cash flow. Trouble with making this overview? We can help, get in touch with us!

Bill quickly and complete

The faster you send your bills to your customers, the quicker they will be paid. Completely fill in all the needed and right data on the bill. These are data like your name, company name, address, VAT-number, the date, explanation about what service or product the bill is for, billing number and the VAT-tariff that is used for the product or service.  Tip: You can automate this process for approximately 80% when working with an automated online billing program. If you optimize the billing you wil automatically improve your cashflow.

Fifo or Lifo

Does your company sell products? Then you must choose a way to manage your inventory. You have to be consistent in the way you manage your stock to create structure in your administration. You can use the following methods to create structure:

Fifo: First in first out: The products in the inventory that are bought the longest time ago will be the first to be sold, so the oldest products will be sold. That way the expiration date will be used to the fullest.

Lifo: Last in first out: Most recent bought products will be sold first.

Just in time: The production of the products and the delivery to the customer are as close to each other as possible to minimize inventory costs.

Dropshipping: A relatively new method of selling products. This method is used when complete products are being bought and sold by a business owner, you directly send the bought product to the customer from the production place. You do not have any inventory yourself, that way you don’t have any inventory costs.

Keep track of your VAT-returns

Most entrepreneurs are obliged to send in documents every quarter of the year for their VAT-return. When payments are done right before the end of a quarter of the year you have to take into account that payments may take longer to process. Therefore it is recommended to send your bills before the 15th of every month (especially when it is the end of a quarter).  

Manage your creditors

Try to pay your bills on the moments which fit the best for you. Always keep in mind that most bills need to be paid before a certain date.  If you cannot pay your bills because of financial problems, don’t wait but ask for delayed payment, in most cases the creditor will understand why you can’t pay the bill.

First step: insight and structure

Do you want to optimize your cash flow? SFAA can help you improve your cashflow. By doing your administration in the cloud and using smart links to automate the process you will always have a realtime view in your finances. Are you interested in the service’s SFAA provides like administration, renting a virtual office or financial advice? Please fill in your contact information on the contact page, call us on +31 20-2610723 or send an email to info@sfaa.nl

Categorieën: General

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