As a business owner, liquid cash is vital in maintaining a company’s running. However, many business owners in some cases go without cash (Also see Types of Cash Flow Activities – Cash Flow from Investing Activities) inflow into business. This is usually considered a sign of financial challenges for the company. The main reason why companies get involved in this condition is because of the lack of a better solution to preserve cash flow (Also see How to Prepare a Cash Flow Statement by Using the Direct and Indirect Methods?). A company works to keep its cash position and maximize its profit by preserving cash flow. As a business owner, instead of investing time and effort in accounting, you should employ an accounting services in Malaysia to help you focus on your core tasks.
Can a company boost cash flow and make the best use of profits together? Indeed, below are some vital steps for doing so.
1. Make Postponed Payments
It’s very important to make sure the company’s cash flow is preserved at a specific level for running the business as a business owner. If you have suppliers with whom you have developed a good working partnership, attempt to work out a more extended payment period with them to ensure that the cash can be returned to the business. Doing so acts as killing two birds with one stone because you could make profits while also maintaining your company’s financial debt free at the same time.
2. Trade Products and Services
Instead of paying for whatever is supplied to the business using cash (Also see Why Do We Need Cash Flow Statement?), it would certainly be wise for every business owner to attempt and trade products for products (barter trade). Keep an eye out for the supplier that needs products and provide them with products you lack to run your company efficiently. This is an excellent way for any type of company to preserve cash and maintain cash inflow.
3. Buy Used Equipment
Before buying any kind of brand-new equipment, it is good to research whether you can obtain the same equipment that has been used yet is still in good condition. Buying used equipment is much cheaper than buying brand-new ones, which is a better method to conserve cash. Every company intends to make the best use of profits, and one of the methods is minimizing the expenses. If you cut the expenses will reduce the cash outflow, and if the cash inflow is increased, the company will optimize its profit.
4. Equipment Repairs and Maintenance
Instead of buying brand-new equipment, investing in your current ones is good. You need a regular maintenance program for all equipment the company presently has. Hire an expert equipment mechanic or technician with the certifications and experience to work on your equipment to make sure that all your equipment is in good operating condition constantly. This is vital since it will prevent you from commonly having mechanical malfunctions.
5. Layoff and Reduction
Another factor that can drown your cash flow is having too many staff members in your company. Instead of hiring new staff members whenever the company expands, it is suggested to use the current employees’ potential to their optimal potential. Before hiring a new staff member in the company, you should evaluate the advantages and disadvantages of such an action.