| Your cash flow is the lifeblood of your | | | | 4 Experts also advise using prenumbered cash |
| business. You can be billing thousands of | | | | receipts and checks for easier management. |
| dollars each month but if it takes your | | | | |
| clients 30-90 days to pay, your cash flow can | | | | 5 Lastly, pay your own accounts slowly. Of |
| be non-existent - particularly if you have | | | | course you don't want to be penalized for |
| expenses to pay while you're waiting for | | | | late payments, but push it as far as you |
| clients to pay you. | | | | legitimately can. |
| | | | |
| Your cash flow, and your cash flow analysis, | | | | When you know what your past, present, and |
| is your number one tool to keeping your | | | | future cash balance is, you can create an |
| business solvent and thriving. Fortunately, | | | | accurate business plan. Let's take a look at |
| the basic elements of your cash flow are | | | | two aspects of a business plan and how your |
| really straightforward. The equation is: | | | | knowing cash flow will help you: |
| | | | |
| Starting cash | | | | Marketing Plan. Marketing generally costs |
| | | | money. When you know exactly how much money |
| Cash in | | | | you have now and can accurately predict how |
| | | | much you'll have six months from now, you can |
| Cash out | | | | with relative certainty create a marketing |
| | | | schedule that meets your needs. For example, |
| Ending cash. | | | | let's say you want to produce a brochure this |
| | | | month, have a direct mail campaign the |
| Pretty easy, right. It's like balancing your | | | | following month and then release a new |
| checkbook. If you keep a spending plan or | | | | product and a corresponding promotional |
| budget, these numbers are tracked for you on | | | | campaign. Knowing your cash flow can help you |
| a weekly or monthly basis. Good cash flow | | | | get a head start on planning these campaigns |
| management enables you to predict the state | | | | because you will know what you have to spend. |
| of your future finances, and daily management | | | | |
| makes it easy. It makes creating a business | | | | Operational costs. Many of the costs of doing |
| plan, and modifying your plan, possible. It | | | | business are fixed costs. However, choosing |
| enables you to answer the question "What will | | | | to outsource a project or several tasks means |
| your cash balance be six months from now?" | | | | you need to be able to pay a contract |
| | | | employee, and paying employees means you need |
| Here are just a few tips to help you stay on | | | | to have a solid grasp of your cash flow. If |
| top of your cash flow: | | | | you don't it could mean being unable to pay |
| | | | someone for a job they've been hired to do. |
| 1 Deposit all checks/payments you receive | | | | |
| immediately. | | | | As you can see, knowing your cash flow has a |
| | | | significant impact not only on your ability |
| 2 Invoice frequently and change your payment | | | | to do business, but also on your ability to |
| terms to 15 or 30 days. | | | | plan your business. And as any business |
| | | | person knows, you don't just wing it in |
| 3 Collect receivables within 60 days. | | | | business, you need a plan. |
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