When you run a small- or medium-sized staffing firm, you have a lot to think about. Keeping your operations humming takes up most of your time. However, you need to keep an eye on key financial considerations as well. These let you have a business at all – making topics like cash flow management an important subject to learn about.
Getting a grip on your cash flow could determine how well your staffing firm performs. In fact, it can define the difference between success and failure.
Stats back this up. One study showed that 82% of failed businesses can trace their problems back to mistakes in cash-flow management. Successfully handling this pivotal aspect of your financial health opens up possibilities for your staffing firm.
But how do you do this? Here are some tips to keep in mind as you manage the cash flow for your small- and medium-sized staffing firm.
Four Cash Flow Tips For Small to Medium Sized Staffing Firms
Understanding Cash Flow
Before you can manage your cash flow effectively, you need to understand it. Don’t feel bad if your knowledge is a little fuzzy. You’re launching a staffing firm because of your skills and expertise in recruiting. Not because of your familiarity with financial spreadsheets.
Still, it’s important to have a solid understanding of the business side of things. This starts with cash flow. Learn what it is and why it forms an important part of your financial planning.
At its core, the concept tracks the way cash moves through your company. You can distinguish the concept from profit and loss because it doesn’t include non-cash items, such as depreciation.
Tips for Managing Cash Flow
Having a broad conception of cash flow will help you in your financial planning. However, you’ll only strengthen your business through concrete policies. You need to engage specific cash-flow management tactics that will give you a strong financial basis for growth.
Here are four tips to keep in mind:
Make Tracking Cash Flow Part of Your Routine
A lot goes into measuring cash flow. You need to know how much you are spending and how much comes into the company. Save these calculations for a big rush at the end of financial periods and you could end up losing track of the details.
Instead, make cash-flow management part of your managerial routine. This will put you in closer touch with your business. At the same time, you’ll minimize the stress involved in the process.
Keep an Emergency Fund
Cash flow is rarely even. Sometimes, you’ll have an excess of incoming cash. Other times, you’ll have to burn through resources while you wait for better times.
When things are rolling, put some money aside. You can dip into this fund during leaner moments. This will ensure that you can make regular commitments, like payroll, no matter what happens.
Try to Collect as Quickly as Possible
A big part of cash flow comes from your revenue. After all, that’s the cash going into your company. Unfortunately, some clients can get behind in their payments. That can lead to major difficulties if you face a cash crunch.
Stay on top of your invoices. Incentivize your clients to pay on time – or even early. Of course, avoid conflict or getting too pushy. But do what you can to keep cash flowing in.
Consider Funding Options
Despite your best efforts, you could find yourself short of cash. In those cases, you need a safety net. A relationship with a funding company can give you the peace of mind you need.
Need Funding? Frontline Funding Can Help!
You can get this through Frontline Funding. In difficult situations, you’ll have a fallback option to keep operations running until your cash flow returns to normal.
Contact Frontline Funding today to learn more.