Liquidity and cash flow: 3 Rules for the young entrepreneur

Liquidity and cash flow

Administer corporate funds in an appropriate way is not easy, especially if you are a novice entrepreneur. We see, then, what are the 3 tips that can help young entrepreneurs to have a sound financial management.

In terms of cash flow and company liquidity, what must the young entrepreneur to embrace a good financial management? Let’s find out right away with analyzing below the 3 golden rules to follow especially when you have little experience in business: creative solutions that, if implemented in the right way, help to achieve excellent results in no time!

Liquidity and cash flow
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# 1- Being proactive pays off

Anyone who wants to optimize the management of expenditure must first of all always have the necessary funds to ensure the welfare of its commercial reality: never be devoid of economic resources, because the business could serve at any time of immediate liquidity to expand, face a situation of crisis or to manage the unexpected.

To avoid getting into when needed without the necessary funds, you can groped to raise immediately the most money or ask for a funding advantage: although spared-obtained money does not serve immediately, the mere fact of owning allows the holder to sleep more soundly and better focus on priority attached to development activity.

Be forward-looking and proactive therefore allows to make favorable even the most unpredictable circumstances. This, is because having a good financial condition can be exploited more easily the important occasions and unexpected (for example, the acquisition of a major customer which requires substantial investment in the company), and because being in a crisis to ask for a loan risks choosing an inconvenient solution.

# 2- Consider the ROI of funding, not only costs

Speaking of cash flow and company liquidity, those who want to improve their financial management and choose to apply for a loan, instead of focusing exclusively on the costs generated by the same, has to show a more accurate display of the benefits obtained in the future thanks to funding.

If the entrepreneur beginners often tend to commit this type of error, the entrepreneur with more experience knows he must consider first the ROI: return on investment acronym of identifying the return on investments, which expresses the effective yield an investment in a particular company.

You may also like to read another article on Heygom: 10 Tips to win your first million

# 3- Know your options

The entrepreneur able to demonstrate a good expense management is well aware of the fact that in a small company even one negative quarter may lead to a serious crisis. To avoid such situations you should know before the needs of viable financing options and advantageous.

In this way, in addition to not create a trip hazard in proposals that in the long term can be extremely inconvenient, it takes also in the condition of being able to calmly select the most suitable solution to their needs without the danger of making rash decisions, and / or incorrect.

Anyone who wants to manage cash flows in the most appropriate manner, after following the advice given just 3, can also:

  • Deliver for their company the timely payment of invoices by customers, by offering the same small discounts (-2-3% of the total amount) if the balances are made by a certain date (for example, 10 days before the deadline);
  • Seek alternative funding formulas , which really agree to the enterprise;
  • Take advantage of the benefits brought by factoring to obtain immediate liquidity.

These are our three golden rules to improve its financial management, despite having little experience in the field: effective solutions to put into practice every day with the primary aim of managing corporate funds in an appropriate manner.