Managing a company’s cash flow is an essential and critical ongoing responsibility to ensure good business standing. One important segment in ensuring that your cash flow is in tiptop shape is through careful debt management. As we all know, losing control of your finances can easily get in the way of a developing enterprise. So, how to avoid unnecessary debt while keeping your costs down?
Tips to Worry Free Debt Management
Here are some worry-free debt management tips to guide you.
1. Formulate a budget plan and stick to it.
Money doesn’t grow on trees. Your business financial sources can easily deplete if you do not create a budget plan at all. Consider current financial position and cash flow before coming up with a budget allocation. Once done, do make sure to stick to it at all times. To prevent veering from your budget plan, consider putting contingencies to address emergencies.
2. Generate profit and loss accounts on a timely basis.
Regardless of your business size and portfolio, debt management should never prove to be a problem when your cash flow is managed on a timely basis. It is, in fact, critical that you have ready data and hands-on knowledge on what goes in and out of your financial aspect at any moment in time. With this, generating monthly profit and loss accounts can help a lot in micromanaging your cash flow.
3. Add technology to the equation.
To ease your burden, consider using accounting software to handle your cash flow and debt management. QuickBooks and KashFlow, for instance, are reliable accounting software programs that can easily keep track of the money coming in and money going out of the business coffers. This also helps save costs on employing a bookkeeper.
4. Consider outsourcing.
Do you know that outsourcing your financial management like accounting, debt collection, and so on is made even cheaper in terms of cost with outsourcing? Yes, outsourcing allows more financial freedom for your business. Your business can get to enjoy top-rated financial and accounting management services at a cost you can afford via licensed firms who hire the best in the industry. Security policy and data confidentiality should never be a problem. Third-party services like SiMar Inc. always sign confidentiality clauses before embarking on financial aspects like cash flow, accounting, and debt management to forge trust and confidence.
5. Spend where and when needed.
Business spending should be kept at a minimum level—at all times. Spending per se should be done where it is needed and at a proper time. We should never question operational spending, which directly affects productivity and the quality of products or services. Marketing and other aspects, however, can be improvised without sacrificing quality results.
6. Get ahead of forex.
One of the many challenges in debt management has something to do with a volatile foreign exchange. Any socio-economic turmoil here and there can easily affect the exchange rate, which could negatively impact your financial standing. Try to find forex expert services that offer money-saving ventures on transfer fees. Some third-party services like Moneycorp’s Forward provide clients a stable exchange rate of up to two years.
7. Consider a quick payment reward system.
Part of successful debt management is on motivating a client to pay up invoices due from them. If you want a more dynamic cash flow, consider offering incentives like discounts or rebates or freebies to those who regularly pay their dues on time or ahead of time.
8. Discourage late payments.
Late payment is one of the biggest challenges in debt management. So, the next time you outline terms and conditions, consider claiming interest on late payments. Stipulate a reasonable interest rate which is computed daily for each day of overdue payment. This helps to motivate your client to pay up on time and discourage bad debts. Just ensure that it’s legally binding.
9. Keep track of invoices.
Consider creating a time log of all outstanding invoices complete. There are various invoice billing and tracking software such as Netsuite, Freshbooks, and Cloudbooks available these days for you to easily check and verify. Put your energy on ticking off the largest amount first.
10. Keep abreast with company practices.
Be reminded that not all companies operate the same way you do. Some businesses require a statement and an invoice, a PR, or what-have-you for payments to be processed. Carefully define this with your client to ensure ease of debt management.
Every business that wants to secure its cash flow standing requires an in-depth debt management system in place. Get ahead of the competition and secure your financial plate. Take these worry-free debt management tips to mind and have fun counting plusses instead of losses.
Do you wish to improve your debt management system? Schedule a consultation with us. Follow us on Facebook and Twitter for updates and new trends in the market.