Every company's main goal is to maintain a healthy financial flow. However, in business, there are situations that we never expected to happen.
If a company has a cash buffer, they don't need to panic anymore because they have prepared for it well.
Many companies go bankrupt because they did not prepare a cash buffer. Let’s explore why the cash buffer is crucial.
Why a Cash Buffer is Crucial for Business Resilience
A cash buffer has a function for reserving money for unexpected moments in the future.
Having enough cash during challenging times can make a crucial difference, allowing the company to survive.
With a solid cash reserve, business owners can remain confident about cash flow, even during uncertain times.
So many business owners who not prepared for the cash buffer and feel stressed when their income decreases and are not ready for that situation.
We will discuss the main factors that you have to manage so the business can survive.
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Calculating Your Cash Buffer: Three Key Factors
There are three key factors that you can manage to build business resilience.
1. Fixed vs. Variable Expenses
First, understand the difference between fixed and variable expenses. Fixed expenses include rent, utilities, and salaries, while variable expenses (e.g., supply costs, and marketing) are crucial.
The fixed expenses are non-negotiable, make sure you have reserves for the next three to six months.
2. Industry Risk and Seasonality
Each industry has a financial cycle, so you have to know how the pattern of your financial cycle to for prepare every season.
For example, retail businesses had a peak season during holidays. The hospitality field might be more seasonal.
Aim to have reserves that can sustain your business through the tough months or until the next expected peak period. there is a very high financial risk in this kind of field.
3. Revenue Stability and Cash Flow Predictability
With stable income and regular cash flow will help you maintain the company,s financial stability. when you need financial reserves you can have them in sufficient amounts and do not need to worry about solving problems regarding unexpected expenses
The company companies can survive if there is a decrease in revenue or a surge in expenses, you will always be prepared for how the situation hits you.
So you have to build a cash buffer for the long term, you can do some of these tips:
- Prepare your long-term cash reserves to face any unexpected situations
- No need to spend unnecessary costs, focus on spending on important and necessary needs
- Take advantage of short-term investments and save your money for future needs. It is better to save it in a low-risk place. Make sure that the investment is easy to access.
Strengthen your business with Lion Parcel
For business people who want to get big profits and be successful in business, Lion Parcel is ready to support your business growth.
With a fast, safe, and reliable delivery service, Lion Parcel helps you reach customers throughout Indonesia and even abroad.
Moreover, Lion Parcel is also available in various regions as the nearest expedition, you will have no trouble reaching POS with your packages.
At the nearest Lion Parcel expedition, the package will be arranged for delivery. If the shipping information is complete and the shipping rate has been obtained, then it's time to make a shipping payment.
After receiving your tracking number, don't forget to reconfirm the estimated delivery of the package to the destination city. After that, always check the journey or track your product delivery via the Lion Parcel goods delivery service application.
Lion Parcel also offers a corporate partnership program with various attractive benefits, such as special rates and priority services. By becoming a Lion Parcel Corporate partner, you can focus on developing your business without worrying about shipping issues.
So, what are you waiting for? It's time to start your successful steps in the business world and achieve your dreams with Lion Parcel!
For more information, you can visit here! Come on, send your package to the nearest Lion Parcel Expedition.
Join us as a Lion Parcel Agent today!
