1. Monitoring cash flow regularly helps avoid 55% of business risks.
2. You can find out where you stand financially.
3. You’ll know on what days sales are high/low.
4. Measuring cash flow makes it 2X times easier to run your business.
5. More than 90% of successful businesses track their income daily.
“Day Book” of Vyapar App helps you track cashflow effortlessly
Cash flow is one of the most important aspects of small businesses. It is impossible to maintain any business without healthy cash flow, growing your business, hiring new employees, and managing your finances properly. Managing and tracking cash flow is not always an easy task but it is an important one.
As a businessman, you must understand and track your cash flow on a day-to-day basis. In addition, you need to know how the amount you bring into your business compares with the outgoing amount. If you’re spending more than you earn, you’ll need to make some changes to your strategies to avoid bankruptcy.
You would also like to read: What is Cash flow Statement? Requirement, Benefits & How to Get Instant Cashflow Report in Vyapar?
All types of enterprises, large and small, depend on inflows of cash generated from sales, investments, loans, and other sources. These inflows are offset by cash outflows or disbursements for fund inventory, payroll, capital expenditures, investments, and operating expenses. Positive cash flow is very essential for the survival of your business. It is a fact that maintaining a positive cash flow can become a challenge for you and your business. When you face cash flow challenges, you are not able to pay your bills on time, leading to a reduction in its credit line or higher interest rates.
# Why is it important to constantly monitor your cash flow?
Cash is the king of every business. Cash is something you must pay to your suppliers and employees so that you can produce and sell your products. Your customers pay you after receiving the products they ordered. That’s why you need cash to continue producing goods and maintain inventory. Also you need to carefully monitor the difference between your cash outflow and the inflow from customers. The longer your average receivables amount, the more cash you’ll need to maintain the viability of the business. Cash flow management is only delaying the outflow of cash for a reasonable amount of time and ensuring that your customers make payments on time.
Many factors can contribute to your business’s cash flow problems, some of which are listed below:
- Bad Collection Practices
Did you know that giving credit to customers provides flexibility and convenience? It serves to build your business and customer base. Increasing credit also means you need to manage the collection process for your business. Asking customers to pay their bills can be a daunting task. You may prefer to focus on your business operations rather than making collection calls. However, when you give credit to customers, you experience zero cash flow until your customers pay. Remember that if your customers fail to pay their bills on time, your business will face consequences.
- Insufficient savings
Many small businesses experience this seasonality with their sales. For example, If you own a retail store, you may experience a surge in sales before Christmas. But you will experience a drop in sales at other times of the year. You need to save the most to meet your cash needs during this time. Business owners who fail to save enough money in slow times face cash flow problems.
- Unplanned Expenditure
It is a fact that any business can be affected by unplanned expenses. Whether your furnace needs repair or an unhappy customer takes legal action against your business. Since you are not planning these expenses properly, you will have to find other sources to pay for them. If you withdraw this money from a business bank account, you are bound to be short of the funds needed to pay your current obligations. Remember that the consequences of poor cash management can be disastrous for businesses and business owners. A company that cannot fund current operating expenses and that cannot meet payroll is effectively out of business unless immediate cash flow financing can be arranged.
Sellers usually expect payment within 30 days. Maintaining good credit with your vendors can help you get better prices and better credit terms. It also saves you from paying upfront for purchases. Late payments hurt your credit not only with your business or a particular vendor but also with other vendors and the financial community. The first thing that every financing firm pays attention to is your credit rating which is very important to manage. A good credit rating of any business indeed equates to lower interest rates and more money available to you when you borrow.
# Where to find “Day Book” & How to use it in Vyapar App?
Go to Reports > Transaction Report > Daybook.
Have Vyapar App?
On the Day Book screen, Select the DAY you like to see the details on
- Shows all the business transactions that happened on that day.
- Shows how much “money” you received and paid on that day.
- You can export these details as PDF or XLS & share it with people who matter.
72% of Vyaparis say “Day Book” of Vyapar has made tracking cashflow faster & easier.
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