Every Kenyan entrepreneur knows the hustle is real. You’ve got a fantastic product, a dedicated team, and dreams of building something big. But there’s one enemy that can sink even the strongest ship: cash flow problems. Here’s the good news: with a few smart techniques, you can keep your cash flowing freely and your business sailing smoothly.
Forecast like a weatherman – Don’t be caught off guard by unexpected financial downpours. Cash flow forecasting involves predicting your future income and expenses. This helps you identify potential shortfalls and plan accordingly. There are plenty of free and paid tools available to help you create a forecast, but a simple spreadsheet can work wonders too.
Invoice like a pro – Speed is key! Send invoices the same day you complete a sale or service. The faster you send the invoice, the faster you get paid. Consider offering a discount for early payments to incentivize quick settlements. For chronically late payers, explore requiring upfront payment or implementing late fees.
Master the art of “Pay me now” – Negotiate favorable payment terms with suppliers whenever possible. Try to extend your payment windows while shortening your collection times. This frees up cash to reinvest in your business.
Create a budget – Every shilling counts. Review your expenses regularly and identify areas where you can cut back. Can you renegotiate rent or phone contracts? Explore free or cheaper alternatives for software or marketing. Every penny saved is a penny you can reinvest in growth.
Manage inventory – Too much inventory ties up your cash. Implement inventory management techniques to keep stock levels lean without compromising on sales. This frees up cash for other needs.
Embrace technology – There are fantastic financial management tools available specifically for small businesses. These can automate tasks like invoicing, track expenses, and generate reports that give you a real-time picture of your cash flow.
Build a cash cushion – Life (and business) is full of surprises. Aim to have a cash reserve that can cover at least 3 months of operating expenses. This acts as a safety net in case of unexpected slowdowns or emergencies.
Don’t be shy to seek help – A good accountant can be your secret financial weapon. They can help you set up solid financial systems, manage taxes, and identify opportunities to improve your cash flow. At CFOD Hub, we do just that, call us today and let us walk this journey with you!
