Money doesn’t buy happiness but is the most essential thing for survival these days. A source that gives immense pleasure if it is in our hands, or moves to providing extreme pain in its absence. We are all running in the race to earn money. From budgeting to insurance claims to debt repayment to stock market investment to credit periods to cash flow issues or liquidity problems, it’s a never-ending cycle.
We often find ourselves stressing over money-related issues. Whether it is about managing your personal finances or worrying about receiving client payments on time. It seems that hustling is the only way to move forward.
Being in the business world, entrepreneurs, or freelancers, everyone has experienced the headache due to instability of payments. It is in our hands to turn the world upside down and manage the factors that cause our stress. Achieving financial stability is a goal that almost everyone aims for.
Further, we will talk about the techniques for effective financial management leading to business growth and survival.
Plan your cash flow
Determine the timing and the source(s) of your cash in advance for the next month or quarter. You will know in prior if you will have adequate, excess, or shortage of cash. If you see that you will struggle to make payments due to a shortage of cash being received, finding an alternative lender in advance will save you from the cash crunch situation. Do not go for a short-term loan until you really need it. Financial discipline is necessary to achieve stability. In case of excess, you can plan your finances well to optimize out of the situation.
Schedule your payments
Start with prioritizing your payments. Know which are essential and which ones are not too urgent. This will help you in determining the situations where you need to inject more cash. Being aware of the minimum business needs, especially by inspecting day-to-day costs can ensure survival. Paying attention to the minute payments you will be able to scrape out the unnecessary expenses that are putting weight in your budget. By doing a routine checkup of your expenses, you will eventually restrain yourself from overspending. Looking closely and revising the spending in each department (marketing, finance, operations, etc.) can make the expenditure more cost-efficient and help in attaining financial stability in the long-run.
Work on crisis management
Heard of a contingency fund? That’s your rescue plan. Though using this is the last resort for us, and can only exploit it in unforeseen extreme situations. A contingency fund is usually used to meet large expenses. However, being ready with a plan B has never harmed anyone. If not a contingency fund, have a crisis management plan. Something that protects you from taking additional debt and also helps you to finance your financial emergencies.
Choose your clients carefully
Test your clients before making a deal with them. From making small sales to working on large projects each client is very important for business and so is the money coming from them. Too many delayed payments can prove to be detrimental to the health of your business. Negotiate your contracts carefully in advance. It is often suggested that you diversify your client base. Depending on the similar client base can make you more vulnerable to the delayed payments in case something goes wrong. It is not about shifting your target and changing your whole client base. However, widening your clientele by adding a few different kinds of people can provide more income security.
Re-evaluate your business plan
Review your strategies. To see the positive changes, you can identify some cases where there are some changes needed. Investing time in reassessing your business plan is crucial for efficiency. You can discontinue some suppliers, or cut back on operations. This can lead to better financial efficiency as you reallocate resources and time to efficient projects or tasks. Check for the money streams that are stagnant or empty. Re-evaluation can open doors to a completely different market that was not initially planned. The money stream can start working in full force again.
Constant cash flows and payments are vital to any business. In conclusion, we would like to say that in the case of cash flows, the best policy is to aim for the best scenario, but at the same time be prepared for the worst scenario. Do everything that’s in your power to avoid instability, even if it means not hesitating in making difficult choices. Without cash, attaining profit is impossible. Exercising cash management and acing your financial planning is the way forward.
Read out blog on Increasing quality lead as a freelancer here.