If you are in business than you know just how cash flow can be a very good thing or a very bad thing. We all know that cash is considered the king and learning the balancing act takes a bit of learning. Although your company may look great on paper, if you do not have the cash you could be headed to bankruptcy. It is a sad fact that many businesses just do not have the proper handle on how to handle the cash flow.
First, understanding what cash flow is will help you get a grip on how to handle this. Cash flow boils down to the movement of cash in and out of your business. When there is more money going out than coming in there is a problem. Learning some basic steps can help you and your business get back on board with handling cash flow efficiently.
Managing Cash Flow
Tip 1: Keep your receivables well managed. It is important to remember that receivables only turn into the revenue when you have the cash. Until a client or clients pay your company, it is not yet a revenue. Be sure to invoice promptly. If you take your time with the billing or invoicing then you are tying up your cash flow, and the customer will take their time paying you. For those customers or vendors that pay quickly offer a small reward.
Tip 2: Pay your bills only when they are due. There is no reason to pay bills ahead of time. Late bills can cause late charges, but there is no reason to pay the outstanding bill way before the due date.
Tip 3: Establish a Line of Credit. Having a line of credit is great for when you run into a cash flow issue. Credit unions and banks are willing to help out businesses. Due to the competition in the banking industry the interest rates are driven down. Although many of us do not like to ‘borrow’ money, it may be just what the business needs to stay above water at some point. Having a line of credit is good to have just in case something happens.
Better Business Cash Flow
These 3 tips to handling cash flow will help you handle the business cash flow more efficiently. Having a plan in place will certainly help you to become more efficient and as time goes on these tips will become habit.