Cash flow issues – are you keeping one step ahead of them?

You may have thought that starting up a small business might have been easier than it had actually turned out to be – one of the big obstacles for small businesses who have just started up is managing the cash flow.

In order to improve your businesses management of the cash flow for your business then follow these simple steps;

•    Where’s your money – time and time again small businesses fall short as they don’t keep their eyes on the flow of the money passing in and out of their business.  Keep on top of your business’s information by getting regular updates on your cash flow forecasts, budget and debtor books.

•    Credit control and debt recovery – it is vital to stay on top of your debt chasing structure.  Debt can be one of the biggest threats to a businesses survival, especially through the recession.  The longer a debt is left unaddressed then the harder it is to get hold of.  Apple the pressure and keep it there…

•    If not you then someone else – If there is a large amount of unpaid debt waiting in the wings and you can’t get hold of it then maybe it’s time to call in a third party debt collector.  Although collection agencies are not always seen in a bright light they mostly get the job done and many small businesses a year benefit from their services.

•    Credit check – it is important to make a credit check of your customers before you go ahead and do business with them and then keep an eye on their payment schemes throughout the relationship.  Credit agencies can provide status reports which will provide full customer financial details.

•    Be clear – in many deals the terms and conditions of the deal are extremely important.  Make sure these terms and conditions are clear so misunderstandings can be kept out of the situation.  This should also make it easier to collect any outstanding payments later on down the line.

•    Hire, don’t buy – sometimes it is better for the business is if you decide to hire or lease equipment as you will be spreading out the payments over time rather than forking out huge sums of money all at once.  You should be able to hire or lease anything from cars, heavy goods vehicles machinery and furniture…

•    Understand the customer – many businesses will have a specific date for payments of invoices.  It is a good idea to understand when these dates are and placing them on your own calendar.  If the date has passed and you are still waiting for your money then you can be sure that something probably has gone wrong.

What about you?

What cash flow advice do you have?  Do you think cash flow issues should be at the forefront of any small start up business or are there bigger concerns that should be given more attention?  Let us know what you think…

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