Many entrepreneurs offering innovative products and services find their businesses in dire straits because they have not paid sufficient attention to cash flow. Keeping a close eye on cash flow and making projections of upcoming income and outflow is an integral part of the management of any business. Here are some tips to ensure healthy cash flow in your company.

Follow a Budget

Creating and sticking to a budget is one of the most effective ways of managing cash flow. Consider customer terms, sales cycles, and other factors when estimating incoming cash, and figure in salaries, taxes, and supply and equipment needs when forecasting expenses. However, don’t put a budget in place and then set it on autopilot. Monitor your small business budget at least monthly, note any discrepancies, and make corrections to ensure ongoing healthy cash flow.

Invoice Promptly

To reduce the likelihood of impediments to your cash flow caused by late-paid receivables, send invoices immediately upon completion of work or delivery of goods. Consider using email to ensure that invoices arrive quickly. Before payment due dates, remind customers of their obligations. If you offer sales on credit, providing discounts for clients who pay early is a means to expedite cash inflow. Request down payments on large orders.

Pay Bills Wisely

Put your cash to best use by paying bills on time but not early. If you have the available funds to handle a purchase without hindrance to your cash flow, consider requesting a discount for cash payment.

Have a Back-Up Plan

Despite satisfactory sales and careful management of cash flow, shortfalls sometimes occur. To minimize the negative impact of these unforeseen fluctuations in inflow, have cash sources in mind as contingencies. For instance, you may have personal assets you can convert into cash or family and friends from whom you can borrow. Secure a line of credit with a financial institution when times are good so you can draw upon it in an emergency.

For financing options to increase your company’s cash flow, contact JNI Lending today.