To control cash flow, use these business policy suggestions. They'll help any business determine how much money is readily available, will make entrepreneurs more aware of where their debts lie and where better cash flow techniques are needed.
Improve Cash Flow Idea - Monitor Credit Regularly
Keeping track of how much credit is extended to customers is a large part of cash flow. This means using credit bureaus when discussing how much credit to offer as well to monitor ongoing credit ratings, taking deposits on larger purchases, and reviewing internal credit policies.
Improve Cash Flow Idea - Deposit Money Daily
No matter how small, make daily bank deposits of cash, checks, and credit card slips if the business doesn't use Point of Sale technology. Daily deposits help with credit, as they increase the businesses' daily bank average, and takes non-usable funds and makes them readily accessible immediately.
Improve Cash Flow Idea - Restrict Petty Cash
Are all of the petty cash expenses being made really necessary? Review its use, and see if its possible to reduce the amount of money in petty cash as well. Maybe keeping a higher bank balance is more reasonable of an option, as well as cutting the number of people who have access to petty cash.
Improve Cash Flow Idea - Create No-Budge Credit Terms
If yours is a business where customers pay before receiving a product or service, don't change this policy for a friend, long-time customer, or because the client doesn't have any cash on them but can write a check. Share credit terms will all customers, and follow through promptly if they aren't followed. When cash is tight, making and adhering to credit terms are a crucial measure in keeping cash flowing.
Improve Cash Flow Idea - Keep Budgets Separate
There's a budget for the business, and then there's a cash flow budget - and the two aren't the same. The overall budget focuses on the big picture, while a cash flow budget is more about the day-to-day finances, where the money is coming from, and where its going. Use a financial professional to set something up for the business so that if an emergency arises, it'll be easy to see if the costs can be covered.
Improve Cash Flow Idea - Subcontract
If the business hasn't hired someone already, think about subcontracting out work instead. Not only will the business save cash with regards to administration, human resources and benefits, but its much easier to budget when a subcontractor quotes a fee, too. Just make sure that you're not using a subcontractor as an employee to get around this cash flow idea (see: Independent Contractor vs. Employee for more information).
Related: Cash Flow Projection How To, Cash Flow 101, Determining Business Cash Flow Needs.
Bonny Albo - Bonny offers 20 years of writing experience to her readers. CNN, MSNBC, The LA Times and Macleans all reference her for expert advice.
