As the old saying goes, cash is king. And if it’s true, then cash flow – the money that comes in and out of your business – is one of the most critical markers for any company. With a positive cash flow, you’ll earn a profit. Sustain a negative cash flow, and your business won’t survive for long.
Effectively projecting and managing cash flow isn’t necessarily easy, but it’s essential if you want to run a healthy, successful business. Get on track with these tips:
Know your business
The key to managing your cash flow is understanding the way your business works. What kinds of cycles do your sales move in? When are payments to vendors due? If you know that payments are due at the beginning of the month and sales don’t come in until the end, it stands to reason that the middle of a month might be a little tight, but knowing that means you don’t have to panic about it.
Once you understand the inner workings of your business, you can effectively plan for the future. Say you have a sizable surplus one month – do you use it immediately to make repairs or hire new staff, or save it in case of a future emergency? Your knowledge of your company will help you decide which is the better choice. Just make sure that every decision regarding your cash flow takes the long term future of your business into consideration.
Use effective tools
Managing cash flow can quickly get overwhelming. Fortunately, there are many tools, including Quickbooks, FreshBooks or Xero, that can help you compare income with expenditures, organize expenses and schedule payments. You can also create a basic spreadsheet that you update yourself. The exact tool you use isn’t important, as long as it helps you get organized and stay on track.
Build a Successful Future
Countybank is here to help you and your business! If you’d like to get your cash flow on track and need some personal guidance, call us at (864) 335-2400.