Whether you are just starting your business or working on building your business, cash flow is probably a constant on your mind. Have you heard the phrase “lumpy cash flow”? Chances are you have experienced it. This term refers to cash flow into your business that comes in spurts. Often times this is experienced when the business sends out their invoices. There are some customers that are good about paying and the business may experience a sudden in flow of receipts. Then the famine sets in… Here are some tips to improve your cash flow and help you weather lumpy cash flow.
- Get a great accounting package in place. If the business owner is managing accounts, that is payables and receivables, then they are more aware of the financial health of the business. This awareness can mean better business decisions based on a financially savvy understanding of cash flow.
- Get to know your customers. With the online research at your fingertips you can check resources like the Better Business Bureau, Google, LinkedIn, Twitter, etc. to see what is being said about those you are considering doing business with. In effect, you are extending a form of credit to those that buy goods/services from you… make certain they are credit worthy.
- Get cash up front. With the current economic climate there are more and more businesses requesting retainers or deposits on account. I have even heard of some professional service providers working from a draw down standpoint. They have a new client/customer pay $XXX and then utilize those funds to pay for services until they have reached such a point that it is necessary to ‘refill’ the account.
- Accept credit cards. This is a big help as far as cash flow. It simplifies the process for both parties. There is the notion that the credit card fees result in a loss of revenue, but that is a small price to pay when you consider that the current trend is for customers to take 60 – 90 days to pay invoices.
- Stay on top of the process. The small business owner that recognizes the value of owning and understanding cash flow, will increase their chance for success in business. Whether that person hires an outsourced partner to assist with this process or has in-house help, it is imperative that the ‘head in the sand’ option is not a fallback position. Quite simply, keeping cash flowing is a necessity for all businesses to keep the doors open and business growing.
We at RPPC stand ready to partner with you and your business to help move you toward a financially savvy position, and assist with your success in business.