Cash Flow Management
by Dr. Rachna D. Jain
Cash. Most people want more. When running a small
business it's particularly important to monitor how cash is coming in and
how much cash is going out. This month, I'd like to take a few minutes to
share some ideas on cash flow management as in how you can keep more cash in
your business for a longer time.
1) Periodically re-evaluate your
If you are anything like me your business changes and shifts every
4-6 months and this prompts a necessary re-evaluation of the products
and services you are using to run your business. Where can you save money?
Where can you invest more money so you can save time? For some people, this
may mean canceling out on certain business expenses that they never fully
utilize, or, it may mean hiring out and getting help with some tasks on which
you normally spend your own time. Both examples are aspects of improved cash
flow management even though one (hiring out) involves spending more money.
If you can hire out work at less than your hourly or salary rate you're
improving your cash flow because you're creating more space to make more
2) Hold off on electronics and other purchases for as long
as reasonably possible.
I'm not suggesting you suffer or get by
with significantly less than you need but the prices on electronics and
other goods decline over the months. If you need to invest in a new computer
or printer or copier you can save money without sacrificing quality if you
can wait a few months to purchase.
3) Use credit responsibly.
If you have
access to lines of credit you can use these to finance business purchases
rather than paying cash outright. This, in many cases, can give you
20-30 extra days on your money enabling you to save or invest it
for maximum return.
4) Watch out for hidden fees.
Yes, there are some
"costs" of doing business. However, at least once every 6 months,
review what you're paying for services like office cleaning, credit
card transactions, long distance calls, liability insurance, etc.
Make sure these costs are not rising faster than they should. It's a good
idea to keep track of any long-term contracts or commitments to make sure
that you're not being charged too much for standing services. Also, watch out
for those policies which automatically renew.
5) Get paid more.
Another way to manage your cash flow is to charge more for what you do.
Institute planned increases in your payment rates over a year or two. Raising
your fees as a cash flow strategy only works, though, if your spending
remains less than your earnings.
6) Buy in bulk.
This applies to
physical products/supplies as well as non-physical ones (such as services).
You can often realize a significant cost savings on items bought in
bulk especially if you were going to buy them anyway.
7) Keep track of
your discounts and other rewards.
We are inundated with special offers,
promotions and discounts. Use these wherever you can. Just recently, I was
able to save a few hundred dollars on items I purchased due to in-store
specials and mail in rebates. In a sense, my savings was found
8) Give special consideration to your customers who pay early
and in full.
Customers who routinely pay their bills ahead of time, and
who are rewarded for doing so, are more likely to continue this behavior
which results in more cash inflow for you. You might, also, offer your
customers a discount if they buy in bulk from you. This is a marvelous way to
save on the costs of accounts receivable as you generate some fast
9) Invoice before, or soon after, performing a service.
Don't wait to send out bills just once every 30 days. This can delay cash
inflow for months. If you provide a regular, predictable service, plan to get
paid ahead of time. If you must get paid after providing the service plan to
send out invoices at least twice per month so you can better manage the
inflows and outflows.
10) Invest in the growth of yourself and your
Spend money to market your business, invest in your own learning
and get help as soon as possible. The more you put into your business, in
a thoughtful and measured way, the more you will get out of it.
Financial Intelligence - Do You Have It?
The rich and successful stand
out from the rest because of their Financial Intelligence education, not
their scholastic education. This is something that we are not taught in
school but rather something that is acquired.
How to Manage Your
The number one reason why all businesses online and off-line fail,
is probable because the owners overestimate how much money they
have to spend. Many owners will spend more money than the business
is making and will eventually fall apart. Many businesses that
fail do not know how to manage their money properly and make a few
mistakes that cost them big time in the long run.
c) 2004 Dr. Rachna D. Jain. All Rights in All Media Reserved.
D. Jain is a sales and marketing coach, author, consultant and speaker. Sign
up for her free email newsletter, "Sales & Marketing Secrets" To learn more or to contact Dr. Jain directly, please visit
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