In the past 30 plus years I’ve spoken to many business owners who have encountered cash flow issues over the course of running their businesses. The proper management of your cash flow can help you prepare for seasonal business lulls, plan for future financing, and provide you with an overall sense of confidence and control over a challenging aspect of your business.
Here are some of the best practices that I’ve found to be helpful in managing your cash flow.
Most business owners who pay close attention to how much cash flow is at their disposal within a certain period (within a month, for example) have a stronger basis for maintaining positive cash flow throughout the year.
However, even if you are monitoring your cash flow closely, you may find that you’re still encountering issues. I see this occur most frequently with business owners whose industries are busier during certain seasons, such as construction, auto repair and maintenance, and catering. Service industries where demand is higher during certain times of the year may have difficulties averaging their yearly cash flow during the slower seasons.
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Cash flow management can absolutely debilitate a company, leading to layoffs and poor profitability. However, by staying on top of your cash flow at all times, you can avoid future issues and maintain a profit throughout the calendar year.
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