Cash flow is the “blood vessels” of finance, whether it is business or personal. If not managed well, you may be experiencing financial crisis even when turnover is high. In this article, AccNet will show you details how to manage cash flow efficient.
1. How to manage cash flow effectively for business
Planning cash flow details
- Use the table, cash flow projections to each track revenues and expenses, from which the optimal way to manage cash flow effectively.
- Financial planning week by week, month, quarter to be more active.
- Identify the account details, fixed (staff salaries, rents), the costs variation.
Control receivables – decrease the risk of loss of liquidity
- Set prepayment policies or discount for customers who pay early.
- Send email reminders, public debt prior to maturity to ensure recovery of money timely.
- If customers delay payments, measures should be taken to handle as applicable penalty fee.
Note: small Business is often having problems slowly collect money from customers, this affect cash flow. Please follow public debt close to avoid the passive voice.
Manage accounts payable – avoid overdue
- How to manage cash flow efficiently thanks to the agreement with the supplier to extend the time of payment.
- Leveraging incentives to pay early if you have good discount.
- Should not to overdue because it will affect the prestigious partnership.
Tip: Always reconcile the balance of public debt monthly to avoid errors in payment.
Cost optimization – reduce pressure on cash flow
- Cut the unnecessary costs (rent, electricity, water, living...).
- Converted to pattern work remotely if appropriate, in order to save operating costs.
- Application of technology to automate processes, minimize personnel costs.
Diversify sources of revenue – increasing flow of money into
- Expansion of sales channels (online, offline, e-commerce) to not depend on a source of income only.
- Invest in the birth canal words such as securities, real estate to have extra source of money.
- Take advantage of the program of preferential loans if there are conditions good repayment.
2. How to manage cash flow effectively for personal
Budgeting monthly spending
Record all income, spending by each category.
Apply rules 50/30/20:
- 50% off for spending necessities (food, housing, bills).
- 30% for desired personal (travel, shopping).
- 20% for savings, investment and debt repayment.
Construction reserve fund – reduce financial risks
- One of the ways to manage cash flow effectively is to establish the reserve fund sufficient for 3 – 6 month to spend to emergency room.
- Should send this fund into your savings account term or short-term investment to profitability.
Control personal debt – avoid bad debt
- No consumer loans, excessive borrow only when really necessary.
- Prioritize paying off credit debt before investing.
- Avail the incentive program, pay in installments if low interest rates.
3. Tool support cash flow management
File Excel cash flow management
- Panel track income and expenditure details, available calculation formula.
- Classification of cash flow according to each category clear.
- Support online chart helps to easily evaluate the financial situation.
[DOWNLOAD NOW EXCEL FILE TO MANAGE CASH FLOW FOR FREE]
Software to manage cash flow effectively
- Business: AccNet Cloud (Top 1 should buy)Misa , Fast Accounting.
- Personal: Money Lover, Spendee, PocketGuard.
How to manage cash flow effective help businesses avoid the risk of bankruptcy, help individuals to maintain financial stability. Let's plan financial tightly control public debt, the optimal cost to ensure cash flow is always positive.
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