Month: June 2022

Small business owners often find it difficult managing their cash flow initially. Problems can also occur with well established and profitable companies if their finances, operations or investing activities are not streamlined. The management of it has become more critical than ever. Maximisation of cash flow can help your company receive profits faster and meet targets in a short time frame.

Here are four strategies for small businesses to improve their cash flow:

Enforce quick payment terms:

Right from the beginning of your first big sale, make sure to negotiate for quick payment terms. Make it clear to your clients that late payments are not acceptable. If your clients are delaying your payments, that will for sure put you into a negative cash flow shortage. Furthermore, you can ask them for partial deposits or consider offering discounts to clients if they make early payments. In this way they will be encouraged to pay you timely.

Minimise unnecessary spending:

Make sure to reduce your spending on non-essential items. This can include gifts for clients, office space that is not used, entertainment or staff amenities. Also, the best way is to scrutinise your expenses and look out how to free up your cash flow. 

Forecast:

Basically, cash flow forecast is the breakdown of your monthly/weekly/quarterly business’s incomes and outgoings. This will help you analyse where you will have a surplus or deficit of cash in your business account. This will help you manage your company’s finances and plan when to pay expenses. 

Customer credit check: 

There might be a case where a customer doesn’t want to pay you in cash, as an alternative make sure to conduct a credit check, especially before you sign them up. If the client has poor credit, you can safely assume that you won’t be receiving payments timely.

Identifying and evaluating internal controls can be a difficult task for management. However, it is a crucial aspect of the company. An organization’s operational and financial health requires a risk management system. For this purpose, companies must hire professional auditors if they don’t have their in-house audit team. Auditors will scrutinize and check whether your internal control has any deficiencies that needs correction. These controls aim to highlight assurance of a company’s achievement of business objectives. This whole process will make your business operations more streamlined and efficient.

Deficiency occurs when a control doesn’t allow the company’s management or employees to detect, correct or prevent misstatements on a timely basis. Therefore, management must develop a system under which the company’s controls are regularly evaluated. It may be challenging to create a system but these controls help mitigate risks and are essential for risk management.

Benefits of Internal Controls

• – Help safeguard your company’s assets and reduces possibility of fraud
• – Maintains integrity of financial information and transactions
• – Ensures the compliance with financial and accounting regulations
• – Improves the company’s overall performance and operational efficiency
• – Establishes operations monitoring procedures

How to evaluate internal controls?

• – Assess the internal control environment, and whether you are operating with integrity and ethical values. And if your employees are adhering to internal control responsibilities
• – Evaluate your risk assessment and analyze how they can be tackled effectively. This evaluation will ensure if your internal controls are in place or need any fixation.
• – Scrutinize company’s sensitive information and communication system to ensure the accuracy of the information in prepared reports

While some risks are inevitable for companies. However, with effective internal controls you can prevent a major loss or devaluation. Companies who regularly conduct internal control evaluation will be able to mitigate risks and ensure compliance of regulations. Make sure to hire a professional audit team who take over this job and make your internal controls streamlined.