Do you know the current balance of your business checking account? If you don’t, keep reading. Cash flow is the key to business survival. A healthy business generates money for the operations of the business. Check out a few areas to focus on when looking to improve your business’s cash flow:
- Accounts receivable. Do you send invoices regularly and timely? Do you utilize reports, such as an accounts receivable aging report? Don’t ignore this area. If you follow solid and sound collection policies regularly, you can help increase the cash flow of your business. Review your accounts receivable aging report weekly to discover where to focus when collecting cash.
- Accounting software. Do you reconcile cash monthly and immediately after the bank statement is available? This issue is seen on a regular basis within the industry. You should reconcile your bank account regularly enough to be able to know how much cash you have. Accounting software is an inexpensive way to keep better track of your accounts, and this software typically has many additional capabilities that can help you in other areas.
- Banking relationship. Do you have one? There are only a few outcomes that can occur when a business runs out of money. Having a solid, working relationship with your banker can assist you in times of need. The bank is not always the answer, as the business has to be profitable in order for the bank to want to work with you. If you are having trouble paying the bills, you may have trouble paying the bank back.
No two businesses are alike, but all businesses need positive cash flow. There is nothing that will miraculously change the fortunes of your business. However, by being mindful of the areas of focus listed above and by possibly making a few subtle changes, you can begin to improve the cash flow of your business.
- Measure Your Operations with Key Financial Information
- Make Good Decisions with Solid Business Information
- Manage Your Revenue to Plan for Growth