Managing Your Cash Flow
You manage your cash flow by spending less money as possible. Cash flow is the money you have coming in and out of a business. If more money flows into business its cash positive and if more money flows out its cash negative. You can prepare a cash flow projection which can alert you to trouble well before it happens. They are guesses of your future money. Make sure never to assume that your receivables will be the same each quarter. They can be more or less each quarter.
Make sure to start your cash flow projection by adding cash that you have on hand in the beginning with other cash to be received. Another part of making a cash flow projection is knowing how much and the dates of upcoming cash you have to spend. You need to know where all your money is going and know exactly what on. Cash flow projections are the most important statement that you would want to be updated and accurate. If you manage your receivables everything should be a breeze.
If there is ever a problem with your cash flow, make sure to find out why as soon as possible. If you ever feel that sometime in the near future you are going to be short on cash, apply for a line of credit through your bank. If the bank doesn’t work you can always go to your supplier because your supplier wants you to be able to keep doing business with them. This would only work if you are a customer in good standing. Consider going after your customers who are more than 90 days past due. Maybe offer a discount so they will be interested in paying off their debt. Also consider using factors. They pay you on receivables that you might not collect until later on down the line. Factors demand discounts so you will be getting less but it helps if you are in a persistent need of cash. You can also sell or lease back assets like furniture, machinery, or computers in order to get cash. It could help but if you miss lease payments you could lose your assets. Make sure to pay your bills carefully....
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