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The 5 Biggest Mistakes That Can Ruin Your Company’s Cash Flow

Guest Article Cash flow is one of the most important aspects when it comes to running a business. As a business owner, you’re always trying to balance the money coming in versus the money going out. While it is important for you to be making a profit, it’s even more crucial to determine whether your cash flow is positive or negative. We’ll look at some of the biggest mistakes that you can make as a business owner that can send your cash flow plummeting. It’s critical that you understand these mistakes so that you can avoid them in your business. Failing to track expenses If you neglect tracking your expenses, you can end up spending far more than you think. For a new business in particular, you can be eager to get new customers even if that means taking a loss to gain that new customer. The same can be said when you’re searching for a new employee to hire. There are quite a few acquisition costs that some business owners may overlook. For established businesses, it can be easy to lose track of traditional expenses that may continue to pile up while offering less and less value. Examples of these expenses can be out of date phone systems and tech support contracts. Unless you regularly track and evaluate these expenses you can severely harm your cash flow. Diligently track your one time and recurring expenses so that you always have an up to date picture of where you stand in terms of cash. Being difficult to pay Depending on your business, you may have survived for years without accepting credit cards or allowing online payments. Today’s customers have more options than ever in ways to make payments, and if you’re not flexible in how you can be paid you’ll likely scare some potential customers away and end up with a higher percentage of late paying customers. Talk to current and potential customers and ask them how they’d prefer to pay and adjust your business to accommodate them. Not cracking down on late payments and overdue invoices Few things will…

7 cash flow management tips every small business owner should use

Cash is king. If you don’t manage your money well, you could find yourself out of business quickly even if you have plenty of sales. I’ve written 7 of my best money management tips that every business owner should use to run a successful business. Use a Budget: Every Fall you should develop your new budget and sales goals for your business. You need to make sure you understand your monthly burn rate or how much money it costs to operate your business monthly, including payroll. It will help you have a clear understanding of your business expenses including office supplies, inventory, labor, shipping, accounting, legal, marketing, health insurance, business development and your quarterly business taxes. You also need to understand how much profit is in every sale. It’s important to review your budget before making any major purchases for your business. Create Money Rules: How you pay bills in your business should be established by you and not when you receive an invoice. I pay vendor invoice twice a month on the 15th and the 30th, no one gets to demand a payment. I manage my cash flow a lot better, knowing when I will make vendor payments. When I have bills on auto pay, I also select the date of the payment with the vendors when possible to manage cash flow, as well. Create an Emergency Savings Account: Just like you should have emergency savings for your household, you need one for your business too, especially if you are a professional service business. My suggestion is that you establish an emergency savings account for your business as a money market account so that you can have liquid cash in case you need to move around money to bills when your customers pay late. Try to keep at least two payroll cycles worth of money in this account. Now, you should have a line of credit too, but you need cash on hand as well. Accept All Forms of Payment: Your accounts receivable turnover ratio, is how long it takes you to receive money after you issue an invoice.…

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