.Poor financial management is one of the major causes of the failure of small businesses. Many small firms go out of business because of inadequate working capital and poor cash flow management.
According to an article in MorningStar.com, here are 10 ways to improve the cashflow of your small business:
- Ensuring that you are on top of your invoicing can mean you are receiving prompt payments and help keep the cashflow moving.
- Once the invoices are sent, stay focused on outstanding accounts to ensure they don’t avoid payment.
- Maintain good customer relations to help you work with and receive payment quicker.
- If the customer has trouble paying, work with the customer to at least receive a partial payment on an outstanding invoice as opposed to getting nothing at all.
- Perform credit checks on potential customers to protect yourself.
- Prevent shrinkage, which is the loss of products before they get to the point of sale.
- Keep a tight lid on petty cash and expense accounts to prevent employee abuse.
- Keep an eye on loss prevention through better security techniques and audits.
- Pay your payables promptly to avoid getting hit by costly fees.
- Have backup sources of cash available, such as credit cards, extra cash accounts, credit lines, or just a good credit standing.