Tips for Managing Cash Flow When Using a Business Expansion Loan in India

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When it comes to financial management in running a business, cash flow holds the greatest importance. Whether a company is struggling to sustain its operations or planning to grow, efficient cash flow management is essential. If a business is running low on working capital, it may face a cash crunch that prevents it from buying raw materials, making supplier payments, or paying wages. Cash flow management is the period between paying the suppliers and receiving money from customers. Small business owners in India can take a business loan for expansion to make it through these cash crunch periods and continue their operations.

Here are a few tips for managing cash flow when using an SME Loan in India.

Identify the Break Even Point

Identifying the point at which the company will break even might not impact the cash flow, but it gives business owners a goal to aim at and forecast their cash flow to achieve it. Focusing on that goal will help business owners to apply for a business loan. How to use it efficiently will totally depend on their need.  

Focus on Cash Flow Management Rather Than Profit

Business owners aiming at expansion must focus heavily on managing their cash flow rather than on profit. While it may sound contradictory, those seeking profit can only achieve that by focusing on proper cash flow management. For that purpose, entrepreneurs must regularly check their business and personal finances.

Maintain a Cash Reserve

Occasional shortfalls are common for small and medium-sized companies, even with efficient plans in place. However, their survival likely depends on how they traverse those circumstances. Small business loans for such lean times reduce the blow, allowing the company owners to focus on their regular business operations or expansion goals.

Hire Skilled Staff

Hiring skilled staff for various business operations helps entrepreneurs handle various business operations efficiently. The required staff includes labourers, accounting experts, marketers, web developers, team managers, salespeople, etc. Hiring qualified experts simplifies business operations, making business and cash flow management easier. Taking a business loan to employ skilled staff can diligently help a company grow, which is especially significant for its cash flow. 

Budget Expenses

During financially tough times, spending money on essentials is an important part of budgeting expenses. Apart from essential purchases, the key is to minimise expenditure and eliminate expenses that are not essential for the business operation. Proper budgeting gives a strong view of the company’s necessary expenses coming down the pipeline. 

Utilise Technology for Rapid Business Growth

Always back up the business with the latest machines, updated equipment, and IT-supported management. Training staff with the latest technological operations is also crucial to increasing productivity and achieving the business expansion goals. So, while planning for business expansion, utilise the latest technology for efficient cash flow management and expand the business.

Improve Inventory

Company owners must check their inventories and make a list of goods that are moving slower than other products. Such products in the stock tie up a significant amount of cash that keeps hurting the cash flow until they sell out. Instead of letting these goods lie in the warehouse without moving out, get rid of them by offering discounts. Many business owners keep holding these products, hoping to sell them someday, but that seldom happens. Get rid of such inventory by selling them at reduced rates, refilling the stock using a Business Expansion Loan in India, and increasing sales to generate more revenue. It eventually helps in efficient cash flow management even during tough times.

Finance Long-Term Contracts and Large Orders with a Business Loan

There are times when long-term contracts or large orders arrive suddenly, but business owners do not have enough funds to grab such opportunities. Taking a Business Loan for expansion in India can help grab such orders and get a great chance to expand. Fulfilling such important orders satisfactorily on time builds a reputation in the industry, attracting more such orders in the future.

Healthy cash flow results in efficient and smooth business operations. While implementing the steps mentioned in this article can improve the cash flow, it’s also important to make the right decisions regarding customer service, marketing, new customer acquisition, product development, etc. An unsecured Business Loan, available for up to Rs 50 lakh, can help cover expenses and get the necessary funds for efficient cash flow management.

About the Author
Amaira Sharma is finance expert and former business growth strategist who has more than 8+ years experience in the industry, now she helps others to get better financial stability and standards. She loves to write useful tips on personal finance and businesses. 

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