Cash flow is king in the small business world. Of course, properly managing your cash flow can be tricky, especially because of how many factors affect cash flow. Producing goods cost-effectively, increasing sales, keeping customers happy and satisfied, and encouraging employees can all affect your company’s cash flow. And if you can improve the cash flow, nearly all other aspects of your small business will improve too.
Read on for some tips on better managing and maintain your company’s cash flow.
1. Maintain Accurate Records
Always be in the know when it comes to your finances. Even if you have a bookkeeper or an accountant who handles everything, be sure to double-check numbers and know exactly where your money is going. Keep a balance sheet, income statements, and cash flow statements, and use them to calculate financial projections for the next few months. If the time comes when you need immediate cash for your small business, you’ll know how much you have and how much you still need.
2. Get Interest
Keep your cash in accounts that will earn you some interest. Most banks offer such accounts, so ask your bank’s loan officer for some options. Try to avoid long-term certificates of deposit if you can, because these keep your money locked in for a certain period of time.
3. Request Punctuality
Don’t let your customers lag behind for weeks when they owe you money. Keep all your account receivables in order, and make sure to invoice your customers the day their products or goods are delivered. Also send up to three follow-up letters if payment is never received—one 10 days after delivery, one 20 days after, and one 30 days after.
4. Maximize Cash Flow
Improving cash flow is simple: decrease expenses and increase revenue. Set up payment schedules, and don’t be afraid to tack on extra fees for modifications of standard products or additional add-ons that don’t come with the product.
If you need help managing your cash flow, Biz2Credit can help. Call 800-200-5678 and ask to speak with a small business finance expert.