Tips for Cutting Cost and Improving Profitability

cut costCash flow is extremely important to small businesses.  It represents the amount of money coming into your company and the amount of money going out.

Cash inflow is the core of your company and comes from different sources – payments from customers, interest on savings or investments, receipt of a loan, monetary infusion from an investor, etc. Cash is very important because you will need it to pay for things that make your business run such as expenses like materials, employees, rent and other operating expenses.

Naturally, positive cash flow is best because it means that your company is running smoothly. If you manage to have positive cash flow, you will be able to make new investments, hire employees, open another location, etc.

Here are 5 ways that might help you with get or maintain positive cash flow.

1.  Implement a spend policy

You should consider including purchase approvals in your spending policy. In order to do that, you will need to involve your employees to make request for purchase approval and forward it by email to somebody with authority to approve it or this can be automated by using an E-procurement system.

Besides purchase approvals, you should also include Travel and Expense (T&E) reimbursement policy. The policy should provide guidelines on what is reimbursable and what is not reimbursable. 

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