If you are among those who selling on credit and never get paid back or you are cash strapped and unable to pay taxes, rents and staffs salaries. All these challenge can ruin your cash flow if not identified or response to promptly in the financial management of your company and addressed adequately, may lead to liquidation of the business.
The inability to manage the financial aspect of business has led to failure of some small enterprise and entrepreneurs. Many companies do not have the record of the account receivables, expenditure and income return, other records that do not correspond with cash at hand. Women in business are guiltier of not keeping enough adequate record of their business operations and often use their personal account for business which is very wrong.
Businesses that are unable to manage their cash flow may not be able to access funds or attract investor and make investment when the need arises. Most entrepreneurs are not aware that they need to acquire financial management skills that would help them overcome risks. Some development financing institution in most country emphasis that business manager seeking funding should acquire training from its accredited entrepreneurship development centres to equip themselves with requisite for good financial management.
What is cash flow management
Cash flow is the revenue or expense stream that changes a cash account over a given period of time. Cash flow usually arise from one of three activities which are financing, operations or investing. Although this can occur as a result of donations or gifts made in the form of personal finance. It is important for business manager to track their revenue and income streams weekly, monthly or yearly. A positive cash flow can arise when accrued revenue from sales and accounts receivable exceeds the cash outflow from accounts payable, overhead expenses, salaries, taxes thereby leaving a wide profit margin. On the other hand, negative cash flow ensue when the cash inflow is lower than negative outflow and in a well-managed cash flow account will show the signs of declining profit before it is too late to remedy.
Essentials of financial management
A fair understanding of accounting, bookkeeping and finance can help change the fortune of your business. Every business owner must have at the click of an eyes his company key financial data such as values of receivable, current inventory level, monthly revenue, monthly profitability and business asset and balance sheet. If you are a business and can not provide these data about your company in minutes then you have a very serious work to do. If you decide to employ an accountant or outsource the finance function, it is still important for you as business owner to have a fair knowledge of finance. It will really help you.
You must find way to earn more
Earning more as well as reducing overhead cost can make business transactions easier as long as the delivery is satisfactory, money will keep flowing in and the hearts of more clients will be won. To achieve this, you need to strategize on other possible ways of raking more income. Taking time to think critically on how to leverage the existing clients base offer other service can also prove valuable. Spending more time to develop a new product or service in line with the present business and the launching them will also prove more profitable.
Manage your company debt effectively
Starting a business with a loan or funds from venture capitalist has been discouraged by business consultants the plan of most entrepreneurs is to start big and this prompts them to seek funds with attendant interest without having an understanding of the business structure or terrain and the risk associated with it. Businesses that have to purchase expensive capital equipment or make commercial mortgage payment should have equity stake and then seek long term loan with single digit interest rates. Before committing to a loan examine the ability of your business to repay the loan and the interest on it within the stated number of months or years. Assess your debts on a regular basis. Look at repayment costs and see whether you need to reduce or increase your debt funding.
Get your pricing right
Companies that experiencing cash flow management problems may have to under-priced their products and services to satisfy their customers. Increasing your price may lower your sales volume slightly but will enable the business manager to make up for decreased volume with higher profit margin. Lowering your price can as well increase profits because the level of patronages will increase significantly. Market response to higher prices should be tested by changing price in the targeted area. You should also consider price review on an annual basis.
Starting Out In The Equity Market
Investing in the stock market is a great way to plan for your long-term goals. Trading in stocks is a good long term investment but you must first understand how to invest to avoid losing your hard earned money. When it comes to investing, experts often mention stock’s as an option. Unfortunately, for many people the idea of investing in stocks is like an attempt to become a professor of mathematics and they don’t think they can comprehend it. Although the process is pretty straightforward and with the right approach, tale of success and not woes will be the outcome.
The option of investing in stocks is often put on the table because not only can it be profitable but it is easy. If you are ready to invest in stocks, it is important to understand the basic of how stock market works for you to maximize the profit. One of the thing you need to understand as an individual before investing in stocks is to save enough money. Without money to spare, there will be nothing to invest. Experts stress that it is important for people to ensure that they have built up some form of savings and have stable sources of income before they start investing in stocks. This is because investment in the capital market is best viewed from a long term perspective and not as a short term or get rich quick perspective. It will be unwise for anyone to invest in stocks with the intention of pulling out the investment after just a month or few.
Get enough information
Information is important, there are many people who have invested in stocks without having a clue on what the stock market is all about and what risk they must take to achieve success. They don’t have any prior knowledge to stock market terminology and when they get information which ordinarily should be very useful to them they can’t make sense of it and sometimes they don’t even bother to seek clarification from the professionals.
Understand the investment purpose
The first you need to do when investing in stock market is to think about why you decide to investing. Some want something that will generate an average dividend for them on constant basis. They are some people who actually invest for the future. After you might have decide why you choose to invest, it is important to determine if there are sectors in which you have preferences.
Get a professional help
A professional help is vital when investing in stock market, while the process of investing may be simple, there are technical aspects that an investor may not understand and need not be bothered with. This is where the professional comes in. you need to invest with someone that can properly guide you through the process.
The process of investing
Once you have decided the purpose for the investment, what sector you want to invest in and save money for the investment, you need to approach the stock broking firm. The firm will then guide through and open a stockbroking account for you and an account with the Central Security Clearing System. When that account is opened, just like a normal banking account, you will need to make a deposit with the stockbroking firm and then you agree with them on what to buy. When all that is in place, they go ahead and buy shares for you and after about three or four days, the stocks would have reflected in your account after which you will get a CSCS statement and also the contract note for the transaction. Whenever you want to buy again, all you need to do is to deposit the amount you want to use to buy stocks and then you specific the stock you want for them; if you don’t want them to make a choice for you.
Diversify your portfolio
This is to help the investor reduce the risk, to diversify your portfolio, it is important to note the preference you have for a particular sector. If there is no preference for a particular sector, it is always better to diversify the sectors. This doesn’t mean buying the shares of different companies. You don’t just buy the shares of different banks and think you have diversify your portfolio. You need to look into each of the sectors and pick the best from those sector at least you can still remain afloat as you have reduced your risk. As much as you are buying into established companies, there are those that are just coming up and you can also put your money there but make sure to make right decisions first.
