By Megan Totka
Every day, new problems arise for small business owners. Tasks like satisfying unhappy customers, motivating uneager employees and increasing sales are just a few issues that you’ll have to solve. The solution to these problems is usually the same: more cash. If you’re trying to find some ways to better manage your cash flow, take a look at these three tips you can utilize today.
Anticipate future needs
There is nothing worse than being forced to search for cash when you’re in a pinch. This is why it’s vital to keep timely, accurate accounting records so you have a solid grasp on your business’s financial standing at all times. Utilize your past monthly income and cash flow statements to calculate your available money and help project results for the upcoming months so there are no unpleasant surprises.
Some business owners chose to be proactive and start a relationship with a bank in case of future cash needs. Notify your banker if you anticipate you’ll need a loan. If the bank doesn’t give you the loan you want, you can turn to the best business credit cards to provide you some cushion until you save up the cash you need.
Keep your cash working all the time
Your cash balances need to be in interest earning accounts, so you are making money at all times. Certificates of deposits (CDs), savings accounts and money market accounts tend to have higher interest rates, so it’s good to have cash in those places and transfer the funds as needed. Keep in mind that it may not be in your best interest to put your money in long term certificates of deposit, since you will lose the interest if you have to withdrawal the principal before the CD maturity date.
It’s also a smart plan to require your employees take direct deposits to reduce the costs of writing and sending checks. Transfer your payroll funds just before the time of payment to keep your cash earning interest for as long as possible.
There are some myths about achieving business success, and one is that you have to do it all. As a small business owner, you don’t need to wear every hat – reach out to a financial advisor to help you learn how to best manage your money.
Train your customers
You’ve done what you can to create consumer demand for your product or services. Now you need to collect payment for the provided product or services upon producing or delivering them to the customer. It’s ideal to receive payment upon delivery; bring an invoice that says “payment is expected” so your customer doesn’t think it’s acceptable to wait 30 days. Make sure to stay on top of your accounts receivable and follow up with invoices that are outstanding, so they get paid. Keep in contact with delinquent payers and offer numerous options for payment to simplify the process and ensure you get your cash.
Small business owners often learn that cash is king, and it’s true – cash is an essential part of running a small business. Aim to build and save an adequate amount of money in order to provide the maximum flexibility your business needs so you can rest easy at the end of the day.
Megan Totka is the Chief Editor for ChamberofCommerce.com. ChamberofCommerce.com helps small businesses grow their business on the web and facilitates connectivity between local businesses and more than 7,000 Chambers of Commerce worldwide.