Cash flow is a sticking point because it technically refers to the inflow and outflow of money in your business.
You need cash to pay bills, cover payroll and take on growth opportunities. Even a lucrative company can fail if it runs out of liquidity.
Maintaining cash flow may seem like a simple idea. But for most small companies, it is easier said than done. Businesses suffer cash flow problems mainly because they don’t collect payments from clients yet they have to pay suppliers.
So what can you do maintain good cash flow in your company?
Hire a professional accountant
An accountant takes cares of the finances in your business. They help you keep track of what’s in your business bank accounts, past-due invoices and the amount you owe creditors and lenders.
They also help you cut costs. For instance, Tax mistakes can take a huge chunk of money from your business. An accountant will help you work out the amount to set aside to secure your VAT and corporation taxes.
Make your clients Pay
Setting up faster and reliable on-the-go payment solutions, like a credit card payments from a reliable provider like First American Merchant, can increase the likelihood of getting payments from clients.
You can also enter contract agreements that will see clients commit to given amounts of payments within specific dates to help keep your cash flow in check.
Automating the invoicing process is another way to ensure a smooth payment process.
Separate business finances from personal monies
You and your business are two different entities. An entrepreneur must keep their personal money from the enterprise’s bank account.
Having a separate business and personal account will give you a clear picture of your company’s performance.
Furthermore, keeping track of your own money can help boost your cash flow. Because financial emergencies happen suddenly, a backup fund can serve as a cushion for your business.
Take care of bills the right way
Discuss longer payment terms with your vendors (creditors), than with clients because you don’t want a negative cash flow.
Use electronic payment to make payments to creditors immediately before the due date to avoid penalties.
Identify a line of funding
The need for funding is inevitable, no matter how good you are at managing cash flow. That explains why you need to identify and make relationships with lenders who can offer immediate funding for emergency situations.
For such uses, consider a flexible line of funding like merchant cash advance or business line of credit that you can tap into anytime.
Author Bio:- Michael Hollis is a Detroit native who now lives in Los Angeles. He is an account executive who has helped hundreds of business owners with their start up business cash advance. He’s experimented with various occupations: computer programming, dog-training, scientificating… But his favorite job is the one he’s now doing full time — providing business funding for hard working business owners across the country.