Cash flow is for many people the most neglected but important part of their business. With poor cash flow you could well go broke no matter how busy you are. This is a depressing thought.
Successful business people are aware of how much ready money is flowing inwards, as well as being savvy as to when invoices should be paid and money received. They do this by having a cash flow projection and working on it daily.
You can do the same quite easily. Simply look at your bank statements and write down money coming in and going out. It is very helpful to split your projections into monthly, quarterly and annual projections. So when you make a sale, note down when the money is due in. Do the same with your expenses. This way you are on top of things.
Do not right down hoped for sales or expenses. Only include sales made. You must be accurate and not indulge in wishful thinking. Nowadays you can buy software that will do the do the job for you, which saves you plenty of time. If you really must pay a bookkeeper or accountant to do it for you.
To help keep your cash flow statement as accurate as possible you must ensure your customers are fully aware of your invoice terms, keep track and be quick to send out polite request for prompt payment and perhaps charge interest on late payments as long as this is included in your basic terms and conditions. When a new customer appears it is a good investment to do a credit check.
If you do run into cash flow problems you have two approaches. One is to contact your creditors, explain the situation and negotiate either staged payments or a further 30-day credit line. At the same time, chase your debtors hard and do all you can to get them to pay you in full.
A happy business gets invoices paid immediately and pays its creditors after 30 or 60 days. This creates peace of mind so be ruthless and enjoy your business.
Successful business people are aware of how much ready money is flowing inwards, as well as being savvy as to when invoices should be paid and money received. They do this by having a cash flow projection and working on it daily.
You can do the same quite easily. Simply look at your bank statements and write down money coming in and going out. It is very helpful to split your projections into monthly, quarterly and annual projections. So when you make a sale, note down when the money is due in. Do the same with your expenses. This way you are on top of things.
Do not right down hoped for sales or expenses. Only include sales made. You must be accurate and not indulge in wishful thinking. Nowadays you can buy software that will do the do the job for you, which saves you plenty of time. If you really must pay a bookkeeper or accountant to do it for you.
To help keep your cash flow statement as accurate as possible you must ensure your customers are fully aware of your invoice terms, keep track and be quick to send out polite request for prompt payment and perhaps charge interest on late payments as long as this is included in your basic terms and conditions. When a new customer appears it is a good investment to do a credit check.
If you do run into cash flow problems you have two approaches. One is to contact your creditors, explain the situation and negotiate either staged payments or a further 30-day credit line. At the same time, chase your debtors hard and do all you can to get them to pay you in full.
A happy business gets invoices paid immediately and pays its creditors after 30 or 60 days. This creates peace of mind so be ruthless and enjoy your business.
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