Mastering cash flow requires tracking money coming in and out, speeding up receivables, and controlling outflows. Net cash flow is total cash inflow minus total cash outflow.
Track and Forecast
- Build short-term forecasts: Map out weekly and monthly inflows and outflows to spot cash shortages early.
- Review financial statements: Regularly inspect operating, investing, and financing activities on your cash flow statement.
- Separate accounts: Keep personal funds completely away from business funds.
Speed Up Inflows
- Invoice immediately: Send bills right when you finish work or deliver products instead of waiting until the end of the month.
- Offer early payment terms: Give small discounts to clients who pay fast.
- Follow up on late payers: Track overdue accounts receivable daily and fix billing disputes quickly.
Control Outflows
- Stretch payables: Negotiate longer payment terms with your vendors without hurting relationships.
- Cut wasteful costs: Cancel unused software subscriptions and trim extra overhead.
- Manage inventory: Order smaller, more frequent batches of stock so cash is not stuck sitting on shelves.
