7 Tips To Manage Your Money Better

Cash flow is the fuel that keeps a business running smoothly. To make sure your company isn’t running on empty, check your current practices against these techniques used by the top money managers.

1. Create a cash flow budget.
A cash flow budget helps to ensure that you can comfortably pay all your expenses and enables you to manage your revenues and expenses proactively.

Key components include a sales/revenue forecast; anticipated inflows, such as accounts receivable; anticipated outflows, such as cost of goods sold; debt repayments; and operating expenses.

It’s important to keep your cash flow budget up-to-date and to make sure that it reflects changes in your operating environment and your plans for your business.

2. Know the sensitivities in your cash flow.
It’s important to pin down which items – such as price, volume, or overheads – will have the most impact on your cash flow.
Cost of goods sold, for example, has a significant impact on your cash flow, yet is difficult for you to change. At the same time, competitive pressures may prevent you from increasing prices.
Cash flow is also affected by inventory days and accounts receivable days.

3. Manage the credit you are extending to your customers.
There are a number of different ways to improve how you manage your receivables.
Establishing effective credit policies is an important part of successful cash flow management.
You might also think about how you can encourage clients to pay more quickly. For example, consider discounts for early payments, or charge interest on accounts that are past due.

While interest and late charges may actually become a source of income for your business, it’s important to apply some due diligence. Extremely late payments are more likely to become write-offs and will also keep some of your working capital tied up.

4. Keep your payables up-to-date.
Regularly reviewing your accounts payable schedule helps determine how well you are keeping up with your credit obligations.
A useful practice is to have an “aging schedule,” which shows you how much you owe, to whom, and whether you are current or past due on any bills.

5. Reduce expenses.
Look for ways to cut back: for example, can the cost of promotional materials (such as printing or production) be reduced without compromising their quality and impact?
When business volume steps up, bring in temporary, contract, or part-time help before committing to additional full-time staff.
An independent audit may reveal redundancies and inefficiencies that you can address.

6. Use credit effectively.
The best credit facility will depend on your company’s individual circumstances, business plans, and existing credit facilities.

For example, term loans are ideal for long-term capital purchases, while lines of credit can be used to meet short-term working capital requirements or to take advantage of unexpected business opportunities.

7. Put your company’s surplus cash flow to work.
Assess how much money you need to set aside for emergencies.
To do this, review your company’s cash flow history for any patterns.
As well, consider how potential changes in the economy, such as currency or interest rate fluctuations, could affect your revenues or expenses.

Any surplus in your cash flow can be used for business expansion, to pay off debts, or to maintain a certain level of working capital.

Business Management And Saving Money

Most businesses try to earn more by being more aggressive in production. Or, they may try to earn more and by being more aggressive in marketing. However, one of the best ways to increase revenue is to do so by cutting back on unnecessary expenses.

This can be done by the principle that focuses on more efficient production, and less waste. Here are a few tips to help managers trim the fat from their operating activities.

1. Mind the electricity. Workers are guilty of not being too concerned about the company’s electric bill. However, it should be noted that electric bills constitute a huge part of a company’s operating expenses. It would be best if policies were implemented that made every worker accountable for the waste in electricity within their jurisdiction.

Workers should learn to turn off unused equipment, turn off lights when not in use, and perform energy-saving tasks in the office. This is possible with some seminars from energy-saving experts. This could help increase awareness about energy-saving measures in the company.

2. Keep this office in order. Startlingly, keeping one’s office space in order is one of the most overlooked ways to saving money in the office. They all know that time is gold. What they don’t know is that too much time is wasted looking for lost or missing stuff.

This wasted time could have been used productively in other pursuits. Japanese business managers have for decades now implemented a policy where workers should organize and clean up their workplaces every so often. Once there are things are in order, locating missing things becomes easier.

And, during a cleanup, you could find some missing items that have been long searched for.

3. Constant quality improvement. Unless the company keeps track of its performance and keeps tabs on its production process, it will never be able to know what it is doing right and what it is doing wrong. Knowing the status of the companies processes is the best way to knowing how to avoid waste.

Processes that should be given attention are the ones that are repetitive in nature. Good business is always finding a way to automate the petition in the workplace. This saves time and helps save money.

Constant quality improvement also means that the business should engage in proper planning. Proper planning helps make the company more productive and more efficient. And this, of course, leads to an increase in money saved and money earned.