Cash flow is nothing but the net cash amount that flows in and out of your business. This is based on the revenue that you collect and the payments that you make which help run the smooth functioning of the business.
Well, this might seem like a very easy task where the revenue keeps coming in and you keep making the payments. Let’s break it, it is not. Cash flow management is one of the trickiest and most important parts of running a business.
The cycle is tricky because it is virtually impossible to draw a line between incoming and the outgoing cash. Rather, the incoming cash immediately gets divided into multiple streams of different outflows that individually feed into the separate parts of your business. Looked at it this way, cash flow then becomes a little more complex than you intend it to ever be. Moreover, without a proper cash flow management, you will not be able to make payments to your suppliers and in turn there will be no inventory.
Therefore, you should try and maintain a positive outlook towards operating cash flow and to grow and expand your company resources. The best way to achieve this is through inventory management.
In the day and age of the internet, thousands of online companies depend on web development platforms. This is basically something that helps a company/store to setup a website out of their house. They do not require to physically purchase a premise but rather invest in the website.
Among such companies is Shopify, which enables anyone to sell their products online. With such an online setup, you can create a cash flow statement according to the inventory. In addition to that you can keep a track of it on a weekly basis or a monthly basis, depending on your needs.
Here are some ways in which one can manage inventory that provides better cash flow results.
Stocking Up Supply
Stocking up supply and having control over your stock eliminates the chances of miscalculating the supply you have. The inventory integration for Shopify helps online companies who sell on Shopify achieve their goals. All you have to do is to track the incoming and outgoing inventory to know the number of products you should stock.
There has to be a balance; if the stock is high, it can hurt your cash flow as there will be more expenditure as compared to the inflow of the cash. On the other hand, if the demand for the products is not matching the stock, it will create a negative cash flow for your online set up.
If proper inventory management is neglected it may lead to order issues and that will then lead up to customer dissatisfaction. With the right tracking tools, you will always be a step ahead in updating your supply and keeping a tack as to what your customers demand. Also, if you have fewer products than what the market demands, you must keep that in mind and work around that by making sure you check your inventory and have the right amount of supply for your customers, to avoid customer dissatisfaction.
Backtracking to the previous mistakes on your inventory is the best way to improve your current. You must track your inventory for; products that did not arrive on time or were cancelled or had lengthy turnaround times. This will help you bypass such problems for the future and let you make correct use of inventory management tools. There are enough online tools that can help you achieve your business goals.
So make inventory and cash flow management your priority now.