Avoid Cash Flow Issues With These 5 Tricks
Your company is only as good as its cash flow. Without positive revenue coming in on a regular basis, you cannot hope to grow your venture. Many businesses fell short after the Great Recession, and the owners had to ditch their dreams and shut their doors. Here are five ways to help avoid this from happening to you by keeping the money coming in.
1. Stay on Top of Your Finances
Make certain you are running accurate financial reports monthly to assess the overall monetary health of your business. You need to assess your strengths and weaknesses in your profits and losses, so you can determine any fixes necessary to keep the money flowing into your venture.
2. Project Realistically
While assessing your overall cash flow health, you should also project your financials as far ahead as you can based on your past. This helps you determine lean periods versus profitable periods so you can better prepare for the natural lows and highs of running your business.
3. Assess Your Receivables
Make certain that those who owe you money are not only paying you on time but also within a schedule that suits your needs. If you are currently billing at a 60-day net cycle and finding yourself short on funds after about 45 days, you need to shorten your net billing period.
4. Assess Your Customers
While you’re looking at your billing structure, look at your customers as well. Do you have a handful of “problem children” who never pay their invoicing on time? If so, how much money have you lost? Reduce your risk by being picky and choosy about to whom you issue credit and then be faithful about billing and collecting when necessary.
5. Get Your Team Involved
You might think that the financial health of your business should be your business only, but if you keep your team abreast of the company’s overall picture, you might also find that they are more vested in your success. If you staff understands your profit goals and needs, they can better work toward achieving them, so keep your employees in the loop.
Avoiding cash flow issues is critical to any business small or large. You need money to make money. In order to achieve the success you desire, stay on top of your company’s entire financial picture, including its in-flows. Make certain that your billing structure, customer base, and employees are all working toward the same goal, and that is Fortune 500 one day. It’ll happen.