Small Business Tips for Cash Flow Management

Nothing is more important than cash flow when it comes to your business’ viability. As the owner of a small business, you are probably already aware of the negative implications that are associated with not having enough cash on hand to meet vital expenses. Even if your brand is profitable, having uncollected balances from clients or payment terms that are not favorable can make it hard to stay afloat. Below are some strategies for improving cash flow management, which can help you to avoid cash flow troubles down the road.

Be Organized

Organization and diligence go a long way when it comes to the money going in and out of your business. The best way to stay on top of your cash flow is to use an accounting software that keeps track of inflows and outflows, such as sales and accounts receivable as well as accounts payable, salaries and monthly operating expenses, including utilities and rent. It is also a good idea to run cash flow forecasts on a regular basis to help detect any patterns in your cash flow that may be undesirable.

Watch for Leaks

If it feels like your money is disappearing faster than you make it or you notice that chunks seem to have disappeared into thin air, it is a good idea to watch for money leaks. Money leaks can come in different forms, with some being easier to identify and rectify than others. Examine financial records and also evaluate ROI to make sure you aren’t spending more than you are converting, thus throwing cash down the drain.

Consider Changing Payment Terms

Another forerunner in the cash flow crunch game is business payment terms. If you don’t get paid for a month or more after your work is finished, it can make it hard to keep up with bills. Although in an ideal world, payment would be received immediately for services, it doesn’t always happen. Consider making the payment window 15 days rather than 30+ days. Also consider sending out an automated email reminder when clients approach that date to keep cash flow operating smoothly and efficiently.