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How to Manage Your Small Business Cash Flow

Managing your small business cash flow is an important part of running a successful business. Keeping track of your cash can ensure your company remains profitable and successful despite ups and downs in the economy. Your cash flow can help you meet your daily needs as well as your long-term goals. In order to successfully manage your cash flow, it’s important to plan ahead and make sure you’re keeping enough money on hand. Estimating expenses and factoring in when bills are due can help you keep a healthy cash flow. For advice from Bookkeepers Chelmsford, go to https://yourbookkeepers.co.uk/bookkeepers-near-me/chelmsford

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A basic way to determine your cash flow is to figure out your net profit by subtracting operating expenses from your gross profit. A positive net profit means that you’ve made money while a negative net profit means that you’ve lost money. You can use an income statement to find this information, which is also called a profit and loss (P&L). However, you should remember that an income statement doesn’t always reflect the whole picture of your business. For example, if you took out a business loan or startup capital, that money won’t show up on the income statement. However, the interest on the loans is also included in your P&L, and debt repayments can eat up a small business’s cash.

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If you’re not making enough profit, you should cut back on your recurring expenses. This will help you achieve a better cash flow. Also, consider leasing or selling some of your inventory if it’s not selling well. This way, you can generate extra cash, and use the cash flow to invest in more profitable items.