Managing cash flow is the golden rule for most small business success. Too many small businesses fail due to poor cash flow management.
To avoid getting your business into trouble, consider the following tips:
Prepare a cash flow projection
– Cash receipts, including income from sales and income from financingcash disbursements, including all expenses (cost of goods, operating expenses, loan payments, income tax payments, etc.).
– Net cash flow — opening cash balance plus receipts, minus disbursements.
– Ending cash balance.
Review discretionary spending
Any items that are not essential to current operations can be deferred or eliminated. Such expenditures may include travel, meal, entertainment, advertising and bonus payments. Caution does need to be exerted not to eliminate or defer spending that will affect business’s ability to generate revenue.
Speed up payments
– Confirming the correct location and contact details so the invoices reach the right person.
– Clearly stating on your invoice that you reserve the right to charge a set late fee for overdue invoices.
– Contacting customers to tell them what corrections or adjustments are being made to their invoice before sending the amended invoice.
– Quoting any relevant customer reference number customers have provided.
– Including a credit card or online payment option.