What is cash flow management? How to effectively manage cash flow? Read the article below to understand what cash flow management is, how to manage cash flow in business for retail stores.
With any profession, or in everyday life, effective cash flow management is a matter that everyone wants to achieve, and seeks to achieve. Especially in business. Money is not only the purpose, it is also an important basic element to maintain the stability of the business process. There are quite a few ways we think about, are advised or have used but are not effective. Therefore, the following Sapo Blog will give some basic ways and notes in the process of effective cash management for business people.
Cash flow management is the ultimate factor to help maintain the stability of business operations.
What is cash flow management?
Before you want to know what cash flow management is, you need to understand the concept of cash flow. Cash flow is the amount of money coming in and out of a store or business. Cash flow consists of two directions: Money comes through customer purchases and money goes through expenses such as import goods, staff salaries, store operating costs such as space rent, electricity and water. , Internet,…
Thus, cash flow management is the management of the store's receipts and expenditures, and cash flow management is considered effective when you can limit or slow down the process of cash spending and raise or increase cash flow. speed of receipts.
Why is cash flow management necessary in business?
Whether it is a large company or a small store, cash flow management is also a matter of survival, especially in business, when cash flow is constantly moving, ensuring its stability will determine the level of cash flow. security or stability of business operations. Small movements when there is a risk of money will also cause headaches for traders, especially the issue of arbitrage and unexplained losses.
So how will effective cash flow management in business help stores and businesses?
- Cash flow management helps to stabilize business processes and reduce costs
- Effective cash flow management is the first sign of a high level of profit
- Cash flow management is an important factor to come up with business strategies
- Good cash flow management will minimize business losses
- Coping better during unforeseen business risks or difficult times
So how to manage cash flow effectively?
How to effectively manage cash flow in retail business
1. Clear cash management for each item
In business, you do not have to know how much money you have, how much money you have spent, to be able to manage money as well as you think. Because business activities take place continuously and have different nature: Cash in goods, money in the business process, profit, risk money ... and it is necessary to manage cash in different groups attached to with the business itself.
With this management, you not only ensure the stability of the overall business, but also easily calculate the total revenue and expenditure, the amount of profit and loss or easily catch the holes if the amount of money in and out is not the same. worthy of each other.
Clear cash management of accountsensure the stability of general business activities.
2. Have a plan for revenue and expenditure according to a specific time
To be able to manage cash flow effectively and easily, you should make a plan for yourself, the simplest is to manage cash flow in excel with full records and projections in the near future about the money to be spent. budget for each specific time period.
Moreover, a specific plan for cash management will alert you to upcoming programs such as advertising, or promotions so that you can prepare expenses in advance, calculate so as not to affect the other amounts as intended.
3. Estimating costs and risks
A note when managing cash is that there is always an amount to be spent to anticipate unexpected occurrences or unforeseen risks to avoid affecting the business. If you do not anticipate this, there is a risk that you will not be able to turn your money around in time. Or at the moment when almost all the money of the store is taken to pick up the goods, there is a risk that will cause the business to be in big trouble. These are also the reasons why internal crises often occur whether it is a large company or a small store if this risk occurs continuously.
4 tools to manage cash flow in business
1. Cash management with books
One of the oldest tools that we still often use are papers and books in the traditional way of management. With this method, it is quite effective for small shops according to households or just starting a business. Because the amount of cash is not too much and the risk is not high, managing cash in a recorded way is still effective.
Accordingly, with this form of management, combined with goods management, the amount of expenditure is recorded and aggregated at the end of each day to see profit and loss. Consumption expenditures must be calculated separately: Cost of goods, staff rent, operating costs, etc. However, as mentioned above, the form of book cash management is limited by the size of the store. row. With stores with a larger scale than this form, it will easily arise losses. Moreover, if you lose the book, all the store's income and expenditure information will also be lost and this is a huge risk.
Managing cash flow with books takes time and is easy to lose
2. Cash flow management with Excel
Cash flow management with Excel which is mainly used by accountants with a tabular structure, integrated with many calculations, allows for simpler cash management. This method is widely used with medium-sized stores and even large stores with a number of business items with stable cash flow.
Excel is quite widely used software but looking at these numbers are you sane enough to check?
However, in order to use this application effectively, you need to know how to calculate and create an excel file to manage cash flow scientifically, in general, to be able to effectively manage cash flow. results for the store in excel.
In addition, this data is an offline file and will be difficult for managers to capture when not in the store. If there is a power failure during the process of editing or updating data, the entire previous cash management process will be lost. And in general, the calculation method still requires a lot of time and effort of business people.
3. Manage cash flow with Google Sheets
Google Sheets can be roughly understood as an online file of Excel, this interface allows you to use it completely like an Excel file, but the data on Google Sheets will be saved in the cloud and you can completely download the data. data to the machine for storage.
Cash flow management with Google Sheets is more optimal than cash flow management with Excel, that is, you can easily check the store's revenue and expenditure anywhere, with any device, just an internet connection . In particular, Google Sheets has an automatic save mode and many people can edit it at the same time.
However, the ability to manage cash of this application also has many shortcomings like the offline version. You need to have a certain understanding of the functions on Sheets. In addition, this way of managing cash flow is also not suitable for large-scale stores, especially chain stores.
4. Cash management with sales management software
Sales management software is a fully integrated management “tool” for convenient, fast, accurate and cost-effective business processes. The great thing about this application is that in addition to the features for cash flow management, you can also manage goods, manage inventory, manage customers, employees, reports, ... with many more advantages. conventional management practices.
Cash flow management software with many advantages over conventional management methods.
Cash flow is recorded in detail for each order, payment by each supplier or debt, salary paid to employees, other costs, etc. Along with that is the ability to calculate and produce reports to help business people. easily assess the rate of change of cash flow, which costs are increasing, business efficiency through revenue, reduce the risk of loss significantly, thereby building a business strategy be suitable.
Moreover, an advantage when using sales management software to manage cash flow that the above methods do not have is the ability to synchronize multi-channel sales. If you only sell at the store, you can use the above methods and it's still ok, but when you sell online like selling on Facebook, for example, cash flow management will be much more difficult.
Sales management software will synchronize all data such as customers, orders, debts, etc. to the software to help you manage centrally in a single place. The software will help you have an overview of the cash flow of the business as well as view the cash flow details for each individual sales channel.
The data on the software is also stored in the cloud, so you can access the software anywhere, anytime with any type of device from computers, tablets to smartphones. In addition, when the store loses internet connection, the data entered during the network outage will also be synchronized immediately when the network is back.
Currently on the market there are many sales management software to help you manage cash for your store, from free software to paid software. Sapo POS is a sales management software with powerful cash flow management features, supporting sales shops to manage cash flow, manage cash accurately, quickly and conveniently.
Sales management software Sapo POS helps you manage cash book, detailed in-store revenue and expenditure. All transactions at the store such as sales, goods import, etc. will be automatically generated. In addition, you can also create your own receipts for additional income, payment slips for the store's operating expenses, etc., helping store owners easily control cash flow and avoid losses in the cash flow. store.
Besides, the cash book report will give you specific and detailed data on the revenue and expenditure of each branch, each sales channel over time, you will know right away in the past time, how much revenue you have what to spend money on, specifically how much so that you can evaluate and decide quickly and accurately.
In the cash book report on Sapo, you can not only view the overall revenue and expenditure of the store, but also filter by branch, employee, customer, payment method, voucher type or Details of each receipt, payment, ...
Read more: 6 effective store management methods for retail stores
If you are still wondering about Sapo POS's ability to manage cash flow or don't know if the software is right for your store, don't worry, Sapo offers you a free 7-day trial to try it out. not only cash flow management, cash management but also all other features available on Sapo. What are you waiting for, sign up today!
Free experience of sales management software Sapo POS