Steps to Avoid Cash Flow Problems

Having control of cash flow is one of the most important aspects of running a small business. As the saying goes “cash is king” and is also the lifeblood of any business operation. If your cash runs out – regardless of how big your accounts receivable or asset accounts are – you could be in serious financial trouble.

The key to avoiding cash flow difficulties is to project your cash flow requirements in advance. This way you will be able to manage your receivables and expenses so you don’t get caught in a cash crisis.

  1. Implement a Good Receivables System
    Set up a system that records sales, generates invoices and monthly statements to track your clients orders. You should also put in place procedures on dealing with overdue payments and have an aging debtors system to see exactly where you are with overdue clients. Having a good accounts receivable system will improve your chances of receiving payments when due.

  2. Project and Track Sales Correctly
    Base your projection figures on conservative estimates, known customer requirements and past sales figures. This will ensure that you don’t...

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