The term cash management refers to the collection, concentration, and disbursement of cash. In many ways, managing cash flow is the most important job for business managers. If a company happens to miss paying an obligation due to lack of cash, the company becomes insolvent, which is the primary cause of bankruptcy. Not only this but having a poorly managed cash flow leads to having no margin of safety in case of unanticipated expenses, trouble finding funds for expansion, or difficulties in hiring and retaining employees.

Typically, cash flow problems are the leading cause of business failures — so it is important to make sure you understand every technique available to keep your business afloat. To have a successful business, you need to be able to manage your cash flow well. Here are some useful cash management techniques to help you as you grow your business.

Monitor Your Cash Flow Regularly
Staying on top of your cash flow is the first and foremost important aspect of cash management. To help with this, create a cash flow budget that charts finances for shorter and longer terms. This will assist in understanding where your money will be going and how much is necessary, as well as keeping track of what finances you currently have and should be spending.

Bill Promptly and Accurately
The faster you mail an invoice, the sooner you will be paid. If your company’s deliveries or services do not automatically trigger an invoice, then establish a weekly billing schedule to stay on top of things. Along with this, always include a payment due date to encourage customers to pay quickly.

Encourage Faster Payments
If payments are coming in at a rate that isn’t beneficial to your company, it’s time to begin encouraging faster payments. There are options such as offering discounts for early payment that can be used or other incentives that your company can offer. Be sure to ensure that getting paid early is worth the loss, though. Too much of a discount could only be more of a financial burden.

Designate a Cash Flow Monitor
Choosing a trustworthy employee to monitor cash flow provides your business with someone to watch and inform you when your company reaches a certain threshold. This is an excellent way to stay on top of things efficiently without taking up too much of the company’s time and resources.

Cut Costs Where You Can
To manage your cash well, it’s important to make sure your company isn’t spending more than it can handle. Cutting costs such as subscriptions or services you no longer need, cutting back on utilities, rent, or payroll, or renegotiating terms of outstanding loans or leases are different ways to save your company money.

Get a Business Line of Credit
Lines of credit are good insurance policies against cash flow problems, but it’s important to get a business line of credit before you find your company needing one. If you use either your accounts receivable or inventory as collateral, you may even be able to get a line of credit for a percentage of them

Delay Payments to Vendors
To keep the cash in your account for as long as possible, wait to pay your vendors as long as you can (without risking late fees). The only time that it is a better option to pay early is if there is a worthwhile incentive available, otherwise, stick with waiting.

Use Available Technology
There are different professional accounting software solutions available that will assist you in your finances, as well as cash flow spreadsheets in the cloud at sites such as Dropbox or OneDrive. The benefits of these include being able to access your financials from anywhere and at any time.

Use Banks Wisely
Banks can offer incredibly useful services such as overdrafts or credit that are great for businesses, especially those that are just starting out. The First State Bank provides services such as Business Online Banking, Merchant Card Services, Remote Deposit Capture, and many others that are perfect cash management tools that will assist in recognizing your cash flow and keeping track of it.

These are just a handful of the many different cash management techniques available. Remember, cash management is one of the most important aspects for businesses to keep themselves successful and running smoothly. Recognizing your cash flow and understanding where there is room for improvement is crucial for all businesses, and these cash management techniques are the first steps to helping you become more fiscally responsible.