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3 tips to manage your cashflow perfectly

3 tips to manage your cashflow perfectly

Do you try to manage your cashflow, but never seem to be able close your cashflow gap? This is a problem that many companies face and they make simple errors that hurt their cashflow without realizing it.

To prevent this from happening, we’re offering 3 tips for you to manage your cashflow perfectly. However, to help you apply them with greater precision, we’re going to review the concept of cashflow first. Keep reading!

What is cashflow?

In any organization of substance, the accounts function in the same manner. Money enters, usually from client payments, and money exits to pay bills.

The problem is that all these financial movements don’t take place on the same day, but during a period established by your closing day – which usually occurs every month. To avoid financial losses for your company, it’s crucial that your managers know how to correctly manage your company’s cashflow.

What’s the perfect way to manage your cashflow?

To manage your cashflow perfectly, you should follow some tips from specialists in this area. Take a look:

1. Categorize the payments that enter and exit your accounts

The first step to managing your cashflow is categorizing the money that enters and exits your company’s accounts, because this way you’ll get a clear idea of what brings you more profits and what are your largest expenses. This way, for example, you’ll be able to cut your expenses more easily during moments of crisis

In terms of the money coming in, you can separate payments from your current clients from the payment of old debts, for example. In terms of the money going out, you can divide up your expenses among raw materials, fixed bills, and marketing costs, among many other things.

2. Don’t mix personal expenses with your company expenses

This tip is very important for small companies and for freelance professionals. You can harm your company’s financial health by mixing your personal expenses with your company’s accounts. Getting money from your company’s accounts to pay a personal expense is therefore something that you should avoid.

The ideal is that all of the company’s partners have a salary that they use to pay their own bills without harming the organization’s cashflow.

3. Use cashflow management software

Managing your cashflow manually is very risky, because it’s a method that’s vulnerable to errors. That’s why the best idea is to use management software.

There are various models of management software on the market, with some which are free and somewhat limited, and others that you need to buy but which come with a wider variety of resources. You should see which is the most appropriate for your company’s situation.

All ready to manage your company’s cashflow to perfection? Following these steps you’ll have everything you need to be successful. And to help more people do this, why don’t you share this article through the  social networks?