Cash Management Tips for Your Small Business


Managing your company’s cash flow is imperative to its success  When it comes to running a small business, it’s crucial to have a good cash management system.

Managing your company’s cash flow is imperative to its success

When it comes to running a small business, it’s crucial to have a good cash management system. According to Business.com, “A business runs on its available cash, and everything from everyday operations to planned expansions relies on having cash available to complete needed business activities. A cash shortage at a critical moment could mean anything from a lost chance at profit to the loss of the business itself.”

The phrase “cash is king” is one that will never lose popularity – businesses will always need cash to pay bills, employees, etc. Abbott, Stringham & Lynch, Certified Public Accountants and business advisors, offer this cash management advice to help your company stay on track with cash management:

  • Choose your customers wisely: Establish what your ideal customer would be and understand its financial strengths, business practices and reputation. Target companies and clients with a sound track record in these areas to increase the likelihood of lower accounts receivable balances and reduce the number of payment defaults.
  • Review your negotiating terms: Make sure that the payment terms you offer vendors and customers won’t hurt your company. Offer and accept only terms that you know you can uphold.
  • Make use of a formal collection policy: Closely monitor customers’ balances and initiate collection techniques appropriately.
  • Stay on top of customer relations: There is a significant relationship among customer satisfaction, payment and referrals. If your customers are satisfied, they are more likely to pay on time and recommend your services to other people. Be proactive in addressing and resolving any customer concerns to keep customer satisfaction up.

Susan Ward of Cypress Technologies, an Information Technology consulting business, suggests being aware of current and changing economic conditions. By preparing cash flow projections for the upcoming year, you will be able to see what changes may need to be made and when.

“The outflow part of cash flow is never a problem,” says Ward. “Money will always run out of your business easily. Keeping the money coming in on a regular, sustained basis is the tricky part of cash flow management.”

Recent Articles

Leave a Reply