The start of the year presents a valuable opportunity for your business to set clear objectives with one key priority being the implementation of effective cashflow management strategies to help you meet your business commitments, invest in growth and handle unexpected challenges.
“Implementing efficient cash flow management strategies is crucial because it will enhance your business financial well-being, lower your risk of liquidity problems, and enable you to make well-informed decisions regarding your spending, investments, and expansion plans,” says Roy Avungana, Chief Operating Officer at Chapu Chartered Accountants.
Avungana shares tips on cashflow management strategies that businesses should consider as they plan for the new year:
- Maintain financial stability: maintaining financial stability will help safeguard continuous business operations throughout the year. This helps businesses foresee possible shortfalls and put the relevant risk mitigations’ strategies to ensure that you keep track of the cash inflows and outflows.
- Optimize cashflow management systems: effective cashflow management allows companies the will to invest in expansion projects as the new year starts. Through cashflow optimization, businesses may invest in projects and break into new markets without compromising their financial stability.
- Build cash reserve: building cash reserves will help ensure that there are no business interruptions during less busy seasons or when experiencing delayed payments from clients. It is worth noting that fixed costs such as salaries, rentals, municipality bills need to be prioritised to ensure that business operations run smoothly, and this can be achieved by employing good cashflow management strategies.
- Tax assessments: as you start off the year, businesses should prioritise reviewing their tax position to avoid penalties, optimise savings and ensure compliance with SARS.
- Seek professional advice: procure the services of professional accountants to help you with your financial accounting and tax needs. This will not only help you keep good financial records but ensure that you are tax compliant and take advantage of the tax benefits due to you as a business.
“Effective cashflow management strategies will help ensure that you control your expenses by regularly reviewing and cutting unnecessary expenses to warrant that you avoid any wastage and have adequate available funds to cover unexpected expenses and for continuous business operations,” concludes Avungana.
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