How do you manage cash flow?

Finance
#1

If you’re looking to improve your cash flow management, follow these seven steps:

Stay on top of bookkeeping. Yes, bookkeeping matters! It’s the single best way to understand all the financial transactions in your business, and you can’t do the rest of the steps without it.

Generate cash flow statements. If you have an accountant, they can do this for you. Otherwise, you can use software—or calculate it yourself using spreadsheets. You can up your analysis with cash flow projections to see how your decisions are impacting your future financial health.

Analyze your cash flow. Take the info from your cash flow statements and use it to understand how money is moving through your business.

Figure out whether you need to increase cash flow. Relying on your credit card or line of credit to make ends meet? These are signs you need to free up more cash flow.

Cut spending where you need to. Overspending can result from either covering unnecessary expenses or paying for expenses at unstrategic times. Cut overspending to increase cash flow.

Speed up your accounts receivable. Whether you’re waiting on invoice payments from clients or deposits from payment processors, the faster you get money in your pocket, the more cash flow you’ll have.

Rinse and repeat. Make analyzing your statements a regular part of your back office routine. The more you do it, the better you’ll get at spotting opportunities to increase cash flow—and nip shortages in the bud.