Cash flow management is a test of how well a company operates.
Cash flow is the difference between cash coming into the business and cash going out of the business during a given period.
Here are ten ways to manage cash flow:
- Decrease the amount of money owed to you– get customers to pay their bills
- Cut out excess overhead expenditures
- Keep a close eye on inventory
- Don’t overpay taxes
- Review owner’s compensation – secondary income may be valuable to the success of many small business ventures in the early years
- Consciously structure the payment of bills – pay bills closer to the deadline but do not incur late fees
- Consider biweekly or monthly paychecks
- Update company procedures to make process more efficient and cost-effective
- Plan ahead – using cash saving activities such as renting instead of buying or purchasing used equipment versus new equipment, finding cash paying customers and quick paying customers versus giving credit and late payers.
- Develop a good record keeping system
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