In Business, It Pays to Go with the Flow


Cash flow is essential to running a successful and healthy business. Yet, for many small business owners struggling to manage all the aspects of running a business – serving customers, managing receivables, and processing payroll – managing cash flow is just another responsibility.

The truth is, in these competitive and uncertain economic times, it’s even more vital for business owners to monitor their cash flow to prepare for unexpected events and maximize opportunities.

While no business owner has a crystal ball, you can make educated guesses. Don’t put this off. Many businesses don’t conduct this step until it’s too late and they can no longer meet expenses.The most successful businesses accomplish that by:

  • Managing and staying on top of their cash positions
  • Getting customers to pay more quickly
  • Disbursing payments more efficiently
  • Maximizing idle balances

So how can you accomplish this? Here are some simple steps to get you started.

Project cash flow.

In business, you must constantly look ahead and learn to anticipate opportunities and challenges. That’s why it’s essential to perform cash flow projections frequently. If your business is struggling, you may even want to conduct them weekly.

Your projections should consider:

  • Expected revenues
  • Anticipated expenses
  • Customer payment histories

While no business owner has a crystal ball, you can make educated guesses. Don’t put this off. Many businesses don’t conduct this step until it’s too late and they can no longer meet expenses.

Monitor cash flow.

Today’s technology makes it easier than ever to monitor your cash flow. Tools like online banking allow you to view up-to-the-minute account balances and see which checks and transactions have cleared and when deposits are available. You can usually access your cash flow from anywhere you have Internet access. When you stay on top of your cash flow, you can make financial decisions more easily.

Disburse funds more efficiently.

Utilize full payment terms when paying suppliers. While it’s nice to pay early, holding onto your funds longer will allow you to maximize your cash flow. Just be sure to pay attention to credit terms. You don’t want to end up incurring late fees. One way to control payment to suppliers is to use online bill pay, which lets you control the payment date. Keep in mind that some suppliers may offer a discount for paying early. If that’s the case, take advantage of it.

Expedite collections. 

Running a successful business is about capitalizing on opportunities. In these uncertain economic times, one of the greatest challenges for businesses is collecting payments. Fortunately, there are some steps you can take to improve in this area:

  • Monitor and automate accounts payable to track payments – accounting software programs like QuickBooks make that easy.
  • Offer customer discounts for early payments.
  • Utilize services like Lockbox – this service, which is designed for businesses that receive numerous payments, allows your customers to mail checks and remittances to a post office box managed by a financial institution. The financial institution then collects the payments, deposits them into your account, and provides you with detailed reporting.
  • Encourage your customers to pay electronically – it will save you a trip to your financial institution to deposit checks.
  • Use services such as remote deposit capture – this allows you to expedite collections by depositing checks from your office rather than making a trip to the branch.


Maximize idle balances. 

Running a successful business is about capitalizing on opportunities. One that many business owners miss is the opportunity to maximize idle balances. Many financial institutions offer “sweep” accounts, which automatically sweep out excess balances overnight to invest them.

We’re here to help.

We’d be happy to sit down with you to introduce you to the tools we offer, to help you maximize your cash flow, and to put your business on the path to success. For more information on how we can help your business manage cash flow, call us or stop by your nearest branch.

 

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