Positive Cash Flow Management - Top 4 Tips

81|% of small business fail due to poor Cash Flow Management and it's a major cause of sleepless nights for many business owners.

Today we look at the Top 4 Tips that you can do to gain and maintain control of the cash flowing into and out of your business.

1) Create a 12 month Cash flow analysis - When you are able to see the demands on your business for cash(payments) as well as actual cash coming in, you can plan how to best utilize the money each month. It should also stop you from making the unnecessary purchases, like taking advantage of a 50% discount on inventory items when you have to borrow money or significantly reduce your cash flow to make the purchase. If you have to wait 60-90 days or longer to realize a profit on that inventory your should be thinking twice.

2) Review your Cash Flow statement weekly: In the 1st 5years of business you should be personally reviewing your cash flow statement weekly so you now exactly where you stand each week in terms of cash on hand (in bank). Then you should be review with your account monthly to ensure you cover any gaps that you may have missed and to assist with planning well in advance of tax season.

3) Collect your receivables: If you are aging your receivable for more than 60 days, you will have a cash flow problem. You should only be dealing with clients that pay that pay you on the terms of your invoice and if they are not, you should ensure you charge them the interest you noted if not, they will not take you seriously.  Also make it easy for your client to pay you. Accept credit card payments, eMoney transfers or third party processing like Paypal. Offer discounts for clients who pay early or on time.
The easier your clients can get the money in your hand (bank) the quicker your positive cash flow builds.

4) Control your spending: If you know you have a big purchase of equipment or inventory to buy then plan for that item. If you need to request a loan for that item, contact your bank will in advance with your positive cash flow statement in hand to show how you will be able to make the payments. Also watch your spending on miscellaneous or unnecessary items as they eat into your cash flow statement.

With your consistent attention to the money coming into and out of your business you can determine your marketing and sales strategies much better as well as better manage your future growth and expansion.

With a little effort you will always be able to maintain a positive cash flow in your business.

For assistance with creating or guidance on your Positive Cash Flow Statement contact me directly Juliet Francis