In accounting, cash flow refers to the ‘movement of cash’ in a company. Outgoing and incoming of cash signify the company’s operations. It is the difference in amounts at the beginning and closing of a period, also known as the opening and closing balance.
Cash flow is positive if the amount is higher at the time of closing balance. Otherwise, it will be negative. Positive cash flow is considered as profit. Therefore, companies always strive to keep it positive. Selling assets, new products and services are some ways that can help improve business cash flow.
Did you know many businesses in UAE face financial crises not because they don’t have sufficient money but because they lack the ability to manage cash flow and other finances?
As mentioned before, there can be many ways to improve your cash flow by introducing new products, saving for emergencies and shrinking expense. You can also opt for the best accounting firms in Dubai to help you manage your finances efficiently. It is because experts know it better!
The fact is not only do these firms have qualified accountants with hands-on experience but also they know all the ways to generate profits for you.
4 Tips to Improve Your Business Cash Flow
In businesses, managing your cash flow is critical to prevent disastrous outcomes. It indicates a company’s financial performance. The cash flow account of your company records all the inflow and outflow and other relevant details. Here are some basic tips to improve cash flow of your business in UAE.
Name Your Savings
Businesses use different strategies to save money for major payments each month. It is, however important to categorize all your savings. This is a simple, yet highly effective tip for companies.
For instance, save X amount for billing, Y amount for rent, and Z amount for salaries. Once you categorize all your savings, you will be able to stick to your saving plan and avoid extra (and impulsive) expenses.
Plan for Emergencies
While many businesses do keep some money aside but they forget to specifically plan for emergencies. A vehicle accident, a natural disaster or a huge loss can occur at any time. You are more likely to get into trouble without emergency preparedness. This is again a highly risky position because it can affect the whole (annual or quarterly) budget.
So, make sure you have a separate category for emergency management. This will help you pass through your crises situation without much trouble!
Dodge Credit Cards
Paying through credit cards seem easier and comfortable. But it makes you pay more than your actual bill. This means you may have to use some savings to pay for a heavy bill. And if you stretch it longer, you will accumulate heavier credit debt and this can affect your cash flow. So, it is always better to avoid credit cards.
Expand Product Line
Businesses who keep expanding and offering new services and products increase their chances of growth. You can increase your sales by offering new and useful products/services. New deals and packages can also help you find and attract new customers.
In addition, you can expand your consumer base. This strategy will eventually help positive cash flow. The only issue with this method is it takes time and can’t give you instant outcomes.
In short, there are many ways you can improve your business cash flow. All the strategies however, need proper planning and management and for that reason, you should contact an expert for their services.
You should opt for the Best accounting firms in Dubai that offer professional accounting and financial services to the companies. Services of these firms can not only improve your cash flow but also generate more profit.