Why Creating Constant Cash Flow for Your Business Changes Everything
Healthy cash flow is essential for small business prosperity. However, many entrepreneurs equate sales with success, fail to efficiently manage cash flow, and run into major difficulties. Cash flow problems can become especially acute with seasonal businesses. Here are some tips to help ensure continuing growth by taking control of your company’s finances.
Effective management of cash flow involves forecasting projections of incoming and outgoing funds for the coming week, month, and year. Use these estimates to create a budget that suits the variegations of your company’s seasonality. Periodically review your finances to be sure you are adhering to the budget. If your business regularly experiences an off-season, consider scaling back operations and using the time to plan future marketing strategies.
Brainstorm ideas on how you can diversify your company’s services or products to remain productive during off or slow seasons. After performing services or delivering products, send out invoices immediately, and have an effective follow-up system in place to encourage slow-paying customers. Facilitate client payments by offering multiple options such as credit cards, PayPal, and direct deposits into your bank account.
Always negotiate with suppliers and vendors for terms that meet your company’s needs. Delay payments as long as possible to keep funds working in your own accounts. Instead of buying expensive pieces of equipment, consider the less costly option of leasing them.
If you manage the finances yourself, take advantage of state-of-the-art technology such as digital cash flow worksheets and accounting software. However, if the task becomes too complex and difficult, hire an accountant or financial expert to help you.
Prepare for Emergencies
All small businesses should have cash reserves set aside for emergencies. Additionally, arrange for a line of credit with a financial institution when things are going well, so that you have funds to draw on during lean seasons. When you need an emergency cash infusion, consider alternative lending options such as factoring, equity financing, peer-to-peer lending, and loans from friends and family.
For more advice on managing cash flow, get in touch with Allegiant Commercial Experts.