You’ve likely thought about starting an eCommerce business and are hoping to create a long-term scalable company.
But one of the biggest challenges that you’ll soon find is cash management. You’ll see your revenue come in but then you’ll also have to pay your various expenses.
If you’re not careful, you’ll be running a deficit before you know it! So how do you ensure successful eCommerce cash management?
This short guide will show you how to go about managing cash for your online store.
Here’s what you must know.
1. Have a Business Bank Account
Even if you haven’t yet registered a company, you must have a separate bank account for your eCommerce store. This helps you improve cash flow and keep track of your business finances without muddling them with your personal finances.
You can set limits on how much you want to spend each month. You can get notifications on whether your cash flow is going well or is in danger.
You can also look at metrics to study your store’s financial health. This is the best way to protect your cash and help you sustain your business in the long run.
You can learn about Winden here to study one of the best options for business banking.
2. Automate Your Invoices
One thing that might cause you unnecessary headaches is if you aren’t automating your invoices. This can include not being paid on time by your clients. It can also include not paying your vendors on time and then having to pay late fees.
You want to automate your invoices or outsource them to a third party. Each time you have to get paid, have someone else prepare your invoices and send them to your clients.
Make sure this person or app sends reminders if your clients don’t pay on time. Likewise, automate the payment of invoices from your vendors so that you don’t get hit with late fees.
3. Keep Track of Financial Growth or Loss
As mentioned in the first tip, you want to keep track of whether your cash flow is increasing or decreasing.
You might have $5K in your bank account this month. But was this amount lower last month? On average, is your cash flow increasing or decreasing?
You’ll be surprised at how easy it is to forget what your average daily and monthly bank balances are. You need to create a spreadsheet where you input these numbers.
Look back at this spreadsheet each month to see if your numbers are going up or down.
Improve Your Cash Management
Now you know how to improve your cash management for your eCommerce business.
You want to start by finding a great service for your business bank account. This is a great way to keep track of your finances away from your personal finances.
You must also automate your invoices. This includes sending your invoices on time as well as paying invoices on time. You can also outsource this task.
Make sure you create a spreadsheet to analyze your cash flow. Keep track of whether you’re at an overall growth or loss.
You can find more business tips on our website, so keep browsing!