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