5 Strategies to Help Your Cash Flow
Virtual Administrative Support Services

Cash flow is the lifeblood of any business. This is particularly true of small businesses. Larger businesses generally have a little more “elbow Image of article-1 on virtual administrative assistantroom” when it comes to managing their cash. Not that it is any less important, but they can have a longer reaction time. Small businesses, however, have no reaction time. So keeping a very close eye on your cash flow is an everyday challenge.

Here are five strategies you can use to make your cash flow management more successful.

  1. Monitor cash daily. You should know every morning what your cash balance is, what collections are due and should be received, and what payments need to be made. With these three numbers, you can stay focused on what you currently have, what you will be collecting, and what needs to be paid out.
  2. If cash gets short, take action. If you have, or are anticipating, a cash shortage, take action immediately. There are several things you can do to generate some cash flow.
    1. Get on the phone and call customers that are late payers. Ask them when you can anticipate their payment.
    2. Delay payments to vendors. Do not be a late payer as this can affect your credit score. If you take early payment discounts forego the discount to hold onto your cash. It will pay off to have your cash than to take the discount.
    3. Stop non-critical spending. Be careful of office lunches, unnecessary office supplies, and the like.
    4. Increase sales. Even a small motivation for the sales department (like a day off or an iTunes gift card) can motivate them to bring in more sales. Offer a small discount to purchasers for immediate payment.
  3. Review the budget. Where did you go wrong? If your budget was properly prepared, it should have included a projected cash flow statement. If this cash shortage was not anticipated, why not and what do you need to do to correct it?
  4. Short-term loans. Do you have access to short-term loans, which can tie you over until cash gets back on track? Do not get trapped into continued borrowing and repaying to cover a cash problem. Borrow enough to get you through the crisis and repay it immediately. Focus on figuring out what caused the cash crunch and correct the problem.
  5. Be aware of pet projects. If you, or someone in your management, has a pet project that is consuming cash, stop the project until you can determine if the project is really the best thing for the future of the company. Do not let politics get in the way of making a hard decision. First and foremost is the cash to run the business; everything else comes second.

Next time you find yourself short of cash, take action. Most importantly find out what is causing the problem and fix it. The quicker you act, the better the health of the business will be in the long run.

%d bloggers like this: