Winning Cash Flow Tips
Cash Flow Management is one of the most important aspects of running a small business. Steady Cash Flow provides your business with the flexibility it needs to meet day-to-day needs, serve customers effectively, and thrive.
The foundation for successful business management includes understanding how much cash your business requires each month to operate successfully, when the cash is needed, and from where it will come.
How Can I Increase My Cash Flow?
>>Speed up Receivables.
Bill early and give prompt attention to overdue accounts.
>>Stretch out Payables.
Take the maximum amount of time allotted to make payments.
Regularly review expenses to determine opportunities to cut back. Shop around to ensure you get a good price.
>>Check your Pricing.
Make sure your prices keep up with expense increases and market trends.
>>Balance your Client Base.
Look for ways to broaden your customer base. Depending on a single client or customer in one industry may make you vulnerable to problems.
What Tools Can Help Me Manage Cash Flow?
>>Line of Credit.
A revolving line of credit (LOC) provides a financial safety net when cash flow problems arise. Check it out.
While leasing generally costs more than buying, the monthly payments may be more manageable.
Researching how promptly a potential customer pays bills and manages financial obligations may be helpful. You may be able to reduce the risk involved.
How Do I Project Cash Flow?
Running regular Cash Flow projections, where you forecast how much you expect your business to receive and pay out over a 6- or 12-month period, may help you avoid surprise cash flow problems.
First, track the total cash flow available by adding cash on hand, anticipated cash receipts, accounts receivable, and any miscellaneous cash (such as funds from a loan). Next, figure the amount of cash you expect to pay out, including expected monthly operating expenses and other ongoing costs of doing business. Subtract your cash paid out from your total cash available to determine your monthly cash flow.
Check your figures at least monthly and revise forecasts based on actual financial results. Adjust as needed.