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Tips for Managing Your Business Cash Flow.
| Posted on August 5, 2014 at 2:49 AM |
It's already
the eighth month of the Year, We are gradually getting to the end of the year,
and soon it will be time for Year End Reports. In our last Newsletter, We
discussed the concept of Cash Flow and how it affects our Business Operations;
this month, we will be looking at tips to manage our Business Cash Flow. Being in Business for yourself is like being an Air traffic controller, especially in the area of cash flow management ; You can imagine trying to control 100 Airplanes landing simultaneously on two runways; this can be an upheaval task, but we regularly see clients line up their monthly bills, their projected income, business projects and business expenses and try to combine all these activities, at the same time, trying to ensure a steady cash flow into the business; you can imagine, the projected outcome, if all these activities are not properly coordinated. Cash Flow is the heartbeat of every Business, and if a Business does not have the cash on hand to pay their vendors, they will definitely run into problems. The main Cash Flow Problem, that Business Owners face is as a result of Lack of Creative Cash Management. Below are some Tips to overcome the Ups and Downs of Cash Flow Problems in your Businesses: 1) Always Schedule All Payments: Most Business Owners line up their monthly bills, compile them, sit down and issue all the checks and set up Bill Payments at once; but the trick is to have a " Holding Pattern". It is advisable to schedule each payment, in order to get to your vendors in a timely landing, without affecting other Cash Flow activities. Every Business has Three (3) tiers of Checks Disbursements Groupings: a) Must Pay Group- These are payments that can hurt you, either in cost or ability to operate your business, if they are not paid. These include items like Taxes, Rents, Payroll and Service Charges. b) Important to Pay Group - These are payments, that have a reasonable grace period, and if not paid, a financial penalty can be incurred, as a result of Nonpayment. These include Utility Bills , Credit Card Payments and Insurance Payments . c) Flexible Payment Plan Group - Suppliers, Vendors and Wholesalers, that supply most Small Businesses are the best sources of flexible credit financing. Most of them will continue to work with you, if you arrange a regular payment plan with them.
2) Make
Payments on your Revenue, not on uncollected Sales : I am sure, that none
of us will want to land a plane, hoping that the runway is beneath us in the
fog bank, as also Business owners, it is not advisable to make projected
payments on uncollected revenue. You may wander, what happens to Credit
Facilities, Guess What, Most Credit Facilities still have a timeline for
payment.
3) Do
not use Payroll Taxes to float your Business Operations: Studies
have shown that most Business Owners use the Tax liabilities, collected
during payroll, to float their businesses, rather than remitting the payments
to the appropriate Tax Authorities. They don't realize that they spend
more in potential penalties, fees , interests, time and aggravation, if they
engage in this act. Tax Liabilities grow, if they are not remitted at the
appropriate timing.
4)
Establish Relationships with your Credit Provider: It is very important
for every business owner to plan for a rainy day. Having a great relationship
with a vendor, that gives you a credit facility, avoids cash flow
storms, which might bring in a sense of desperation or lack of control.
5)
Invest in a Good Bookkeeping/ Accounting Service: It is important for
Business Owners to have a grasp of their cash flow and understand the
effect on their business growth. A Good Bookkeeping service is invaluable to
your business, particularly in preparing your monthly financial reports and
cash flow statements, which will help you, see how your Business is doing as
well as maintaining your Business Cash flow.
Please feel free to contact us on 202-422-4586, if you will need further help on how to manage your Business Cash flow and financial Reports. We will love to help you. Remember: The best time to take control of your Cash Flow is RIGHT NOW. |
Categories: Account Setup, Accounts Payables, Accounts Receivables, Balance Sheet, Balance Sheet Reporting, bookkeeping, bookkeeping,Tax Returns,QuickBooks,Bank Reconciliations,bookkeeping services,small business, Budgeting,Accounting,Business Planning, Business Budgeting, Business forecasting, Cash flows, Financial Position, Law of Money, Money Perspective, Online Banking, Payroll, QuickBooks Review, QuickBooks Software, QuickBooks Support, QuickBooks Training, QuickBooks,Small Business Bookkeeping,Bookkeepers rates,business decisions, Spending Wisely, Tax Filing, Tax Preparation, tax refunds, Tax Returns, Tracking your expenses
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26 Comments
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1:29 PM on August 21, 2014
Thanks for sharing Tips for Managing Your Business Cash Flow.
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4:34 AM on August 22, 2014
Accountants startup business says...
Thanks for sharing Tips for Managing Your Business Cash Flow.
Thank you for appreciating our efforts in sharing Great Accounting and Bookkeeping Tips; Our delight is in providing you up to date and current information, on how to manage and maintain your company's cash flow. Keep coming back for more information and you will be glad, you did.
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