Cash Flow – The Most Important Key to a Successful Business
You may have devoted yourself to developing a top-notch service or product line, crafting an aggressive business plan, and hiring great people, but have you spent as much time managing cash flow, the most important key to success? When your income is not keeping up with your expenses, your business is in danger of failing. What can you do to improve your prospects?
Here are Five tips to improve your cash flow:
1. Create a budget
Develop a detailed budget and schedule for fixed and anticipated costs. List dates for every purchase and payment you plan to make – and budget for new equipment, supplies, and marketing to grow your business. Then add in expected payments from customers. Be realistic when estimating the dates you’ll get paid.
2. Track your spending and earning
As you enter your actual expenditures and revenues, analyze if the cash coming in is keeping up with the cash flowing out. If you’re not on track, why not? Is this a temporary or seasonal problem? Or does the cause for your cash crunch require a new approach for your business?
3. Stay on top of your invoices
Time is money and nowhere is that more clear than the time between completing a job and getting paid for it. Narrowing this gap starts with sending out invoices as soon as your products or services have been delivered and ends with collecting on that invoice according to the terms set in advance.
4. Collections are key to cash flow
It’s been 30 days, 60 days, or even 90 days – and your customer has not paid. Then you or your staff or outside collections agents begin the difficult and time-consuming collections task. If you haven’t had time to keep in contact with customers prior to their payment due dates, you may be caught off-guard and in danger of finding out too late about problems with that payment.
5. Explore cash flow back-up plans
So you’re sticking to your budget, tracking expenses, and monitoring invoicing and collections. Yet, if a big customer delays payment and you need funds right away, what’s your plan? Can you dig into your savings? Do you want to borrow from family and friends? If you have a strong credit history and ready collateral, you might qualify for a line of credit or bank loan, but can you afford to wait weeks for approval?
The no-borrow, no-debt solution of choice for millions of business people is factoring. The factoring company takes invoicing and collecting off your plate and pays you upfront on your accounts receivable. You get to use the cash you earned without waiting 30, 60, or even 90 days.
Take the next step with Interstate Capital by click here for a free cash flow assessment to find out how you can improve your cash flow today.