If you’ve read some of the previous blog posts, you may have noticed that cash flow is frequently mentioned as a crucial element for the success and growth of your small business. It’s an area that is not frequently managed very closely until it becomes a significant issue.
This infographic published by SunTrust (https://www.suntrust.com/resourcecenter/article/infographic-best-practices-for-business-money-management-20140610#.Vn8nilJl24h) does a great job of providing information on why cash flow is important throughout the various business cycles, some reasons for cash flow challenges and, my favorite, simple tips to improve your cash flow.
Tips and suggestions I’d like to add:
The simple tips are great ones which show that improving cash flow doesn’t need to be difficult or a lot of work. In addition to the tips provided, I’d like to add the following suggestions:
- invoice frequently – prompt collection of outstanding receivables is important but it all starts with sending an invoice so do this frequently; at minimum, once a month.
- retainer/deposit – a great way to improve cash flow is to obtain a retainer or deposit at the beginning of a project or contract. This is especially important if you will be purchasing supplies.
- review your financial reports regularly – compare your statements to prior periods and budget to understand how your business is tracking and performing. Review your expenses; is there anything that can be reduced? any areas where you need to spend a bit more to grow? Incorporate changes into your cash flow projections.
- mobile and online payments are great; there are lots of options with varying rates so talk to some people and choose a solution that works best for your business.
- accounting software can provide the information listed next to “reliable software”. With bank feeds and customer and vendor balance, payment and aging details you can quickly and easily obtain relevant cash flow information.
Finally, good cash flow management requires timely and accurate financial information along with planning/budgeting. If you’d like help managing or improving your cash flow, get in touch.
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