If you want your business to be a success, it is crucial that you generate a consistent and reliable cash flow. Regular cash flow is going to help you keep your company ahead of the game because you will have the means to be able to keep it running smoothly and invest in strategies that will bolster your bottom line. You should always be aware of your cash balance. Use your accounting software to track what is coming in and going out at all times. Remember, you are the keeper of your cash flow!
- Do the math. Analyze the exact cost it takes to keep your business running each month. After you have a number, trim it down. Keep your expenses to a minimum and always track monthly due dates. Figure out your burn rate- this is how much money it costs to keep your business running each month. Keep this number as close to very low as you can and map out your monthly expenses for the entire year.
- Time is money. It’s essential to keep on top of your payment due dates and you should be sure to invoice customers timely as well. On-time billing and watching due dates for collections means you can keep your cash flow rolling.
- Get a little now. Ask for retainers from customers before starting the work. This will allow you to build your business using their money. It also protects you from starting a large project and then waiting for the payment. Never expect payment on the due date.
- Hold on to your money. When setting up contracts for expenses and costs, always ask for terms. Even if you have the full payment ready, set up payment conditions. This will allow you to stretch out your cash flow for as long as you can.
- Don’t panic. Keep in mind that cash flow is fluid. It comes and goes, back and forth, up and down. Don’t go into panic mode when you see your cash flow start to dwindle, instead stay focused on how you are bringing it back in. If you have a strategy, then you can rest assured that your cash flow will replenish. In tight months, adjust your expenses accordingly. Never make rash decisions based on panic. Calm and steady wins the race!
There are many more strategies and techniques to help build your company’s cash flow. Remember, your business can only thrive when you have consistent cash flow. Cash is still king!
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