Rules Of Cash Flow

When running a small business, cash flow is a big challenge you will face. Following a few basic rules, or knowing some simple tricks, can help considerably. As long as you understand that cash is equivalent to gold, without cash flow coming in, there is no need for the small business.

A main tip is to always know what funds are in your account. If you are basing business decisions upon inaccurate funds, things can go horribly wrong. You should always know your balance, not to the exact penny, but a rough figure is good enough.

When you need to send an invoice out, send it immediately. Get that done. The funds aren’t any good to anybody on an invoice. They need to be paid in immediately.

Always have a forecast over the next quarter at least. You should know your goals for 3 months, 6 months and even per annum. Have a think to yourself, realistically, what your balance could be in the next 3, 6 or 12 months, its your choice. Then when those 3, 6 or 12 months come by, you will be able to tell whether you are managing your business correctly. When it comes to cash management, be proactive.

Recognise Cash Flow Issues

Having cash flow issues isn’t a problem that occurs over night. There would have been previous warning signs. When you recognise in time, this is not a problem. However, the amount of companies that have failed because they didn’t realise the problem in time, is at quite a high number now. Prepare well in advance in order to avoid any cash flow issues within your business.

You may be someone who either isn’t great with all the calculations, or just doesn’t feel comfortable doing it all. There may be many reasons why, you may even be too busy. If you are, that is not a problem as there are many people that can offer a hand. 

Whether it be a bookkeeper, a financial analyst or CPA, it’s a good idea to let a professional take a look at it all for you. They can review your accounts and advise you on a solution.

Of course, everyone wants to grow their business and make a profit, many just need to take a focused and pragmatic approach to doing as such.