Cash Flow: The Lifeblood of Your Business
Profitable businesses can still fail if they run out of cash. Managing cash flow means ensuring you have money when you need it.
Cash Flow vs. Profit
You can be profitable on paper but cash-poor because:
Customers pay slowly (high receivables)Inventory ties up cashYou pay bills faster than you collectImproving Cash Inflows
Invoice promptly after work is completeOffer early payment discountsFollow up on overdue invoicesConsider deposits for large projectsAccept multiple payment methodsManaging Cash Outflows
Negotiate favorable payment terms with vendorsTime major purchases strategicallyReview subscriptions and recurring costsMaintain a cash reserve for unexpected needsCash Flow Forecasting
A simple cash flow forecast helps you:
Anticipate cash shortages before they happenPlan for major expensesMake informed decisions about growth investmentsCash flow reports can be included in your monthly financial reporting package.
