Several Ways To Improve Cash Flow

It means the solvency of your company's bills at maturity.

We've all heard the saying "cash is king". Here are seven quick and easy ways to help you improve the company's cash flow.

1. mobile account (Sweepaccounts): set up multiple mobile accounts in the financial institutions that you are going to use, and earn interest with excess cash balances.

You can automatically post the bill, or turn it into an interest account when you are idle, and turn back to your business account automatically when necessary.

2. management cost (Overhead): assess your indirect costs and see if there is any room for reduction.

Reducing indirect costs will directly benefit profitability.

Management expenses, including rent, advertising, indirect labor and professional expenses, are indirect expenses for direct material cost and direct labor for commercial operation.

3. non productive assets (Unproductiveassets): if you accumulate some non productive nature

They should be cleaned up at this time.

Only when assets, such as buildings, equipment and vehicles, can generate income, you should spend money on them.

4. accounts receivable (Accountsreceivable): effective monitoring of accounts receivable ensures that you send the bill to the customer without fail, and let the other party pay as soon as possible.

5. accounts payable (Accountspayable): negotiate with your supplier to extend the payment period and postpone the time of posting as late as possible.

6. owner's expense (Ownersdraws): monitoring the amount of money extracted from a company for non-commercial purposes, such as owner's expense.

Excessive capital will cause unnecessary cash outflow for the company.

7. profitability (Profitability): review your products and services.

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Assess whether it is possible to raise pricing on a normal basis, so as to maintain or increase profitability.

Using these seven simple methods to improve cash flow in a company helps to ensure that you have good cash flow levels, so as to achieve sustainable operation and company growth.

There are two main financial ratios that can be used to measure the cash flow rate of a company.

1. liquidity ratio (Currentratio): equal to current assets divided by current liabilities.

It should be maintained between 2 and 3, indicating that you have sufficient liquidity to pay for the current repayment.

2. quick ratio (Quickratio): equal to current assets (minus inventory) divided by current liabilities.

It should be maintained between 1 and 2, indicating that you do not need to cash in on inventory.

You can find your current assets and current liabilities balance in the balance sheet.

Paying attention to industry information will also help you evaluate other industries.

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