Managing Your Business’s Cash Flow

Cash flow is the process of moving money in and out of your business. The better you are at managing that flow, the more opportunities you will have to grow and increase profits. Nearly 30 percent of startups fail because of a cash crisis, according to recent data compiled by the research firm CB Insights. Businesses of all sizes can also be affected by cash-flow crises.

Here are some tips to improve your receivables and payables, achieve a positive cash flow, maneuver shortfalls and navigate your business to success.

  1. Complete a cash flow analysis. An analysis serves as one of the best measures of a company’s performance. It allows you to track how much cash you generate and spend in a given period of time, so you can project future cash flows. There are plenty of templates online, and there are also many professional accounting software services that can help you. The Small Business Administration (SBA) offers a free cash flow worksheet.
  2. Apply for a line of credit with Adirondack Trust. We offer lines of credit to cover seasonal and other cash-flow timing differences, including products specifically designed for small businesses. Call or email us today and take advantage of our expertise in this area.
  3. Collect receivables as quickly as possible. Offer your customers discounts if they pay early. Ask for deposits or partial payments on large orders or long-term contracts, so you are generating cash to pay for expenses. Look into electronic payments, which may speed payments by a few days. Enforce credit requirements. Assign a trusted employee to monitor receivables and contact customers periodically to collect payment if necessary. Move quickly on past due receivables. The longer an invoice goes unpaid, the more difficult it is to collect. If you have a past due client with cash flow problems of its own, suggest a payment plan for the amount due.
  4. Build up cash reserves. The survival of your business may depend on how you handle cash shortages. If you start with some cash in your bank account, you’ll alleviate stress during shortfalls. In addition, extra cash allows you to maximize buying opportunities and be flexible.
  5. Put your credit card to work for you. In addition to being extremely useful when cash is tight, credit cards categorize your purchases for easier tracking of your spending.
  6. Know when to pass. Before you take on a big sale, be sure you understand how quickly a client will pay you. Can you manage the outlay to fulfill the deal in the meantime? If you won’t be getting any cash for 120 days, it’s possible you may run out of money.
  7. Get help from experts. Reach out to us for guidance in managing your cash flow. Take advantage of cash flow products and services from us, such as a business line of credit, before you need them. In anticipation of future needs, call us now.


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