Five Tips for Improving your Business Cash Flow
By Dr. Tamara Johnson
While it's not the most glamorous part of running a business, cash-flow management is arguably one of the single most important
facets of having a business. Of course it’s one thing to acknowledge and declare that cash flow is important. But it’s entirely another
thing to attend to the details that will keep your business in the black.
The key is, knowing exactly where to focus your cash-flow strategies. So now, let’s look at the following suggestions to help you
manage your cash efficiently and intelligently.
Cash is Still King
When you get cash in your hand, resist the temptation to spend it. And when you do spend, avoid spending it on fancy cars,
equipment, or clothes. Some entrepreneurs are far too quick to reward their hard work and relieve their stress with new personal
purchases. In some cases, they try to “appear” successful before they actually are.
There is much to be said about a business owner who delays self-gratification, pays attention to the “big picture,” and finally sees
business profits. Always use your cash to build the real, not the apparent, success of your business.
Payment Policies are your Friends
In many businesses, so much attention is paid to making the next sale that sometimes, “Accounts Receivable” is forgotten. After all,
payment policies and procedures aren’t much fun to think about.
Still, you must remember this: A sale is only good if you can collect 100% of what is owed to you. Otherwise, it ceases to be really a
sale and becomes a liability. So, as you seek new clients, ask yourself if they'll be able to pay you on time.
Polish Up your Bill Collecting Skills
The sooner you bill your clients, the sooner you'll collect the money that's owed to you, plain and simple. Your billing and collection
strategy should be to have a monthly or even weekly routine of billing. Remember that delinquent clients are often just as busy as
you are and may simply forget to pay. Often, the best way to collect is to make a phone call.
Whatever you do, try not to let clients go into default mode. The longer they go without paying, the less likely it is that they'll pay you at
all. If possible, try setting up an automatic deduction payment system with your clients' banks, much like the ones individuals set up
with their insurance or utility companies.
Get Credit Savvy
Got great credit? Credit cards can be an effective source for short-term financing, especially because you can usually get low
introductory rates for at least six months. But be smart. The trick is to keep track of when these introductory rates are over. Then you
can get a new credit card and roll the balance over into a low introductory rate.
Another way to prolong low interest rates is to call the credit card company and tell them that you're a loyal customer and would like
to continue using their card at the same introductory rate for another six months. However, you should be very careful about using
credit cards as primary or habitual sources of financing. I’m not advocating that at all.
Don’t be Afraid to Ask for Help
As much financial savvy as some business owners think they have, it is often good to get a second opinion. If you’re not sure about
which route to take, an expert can give you some great suggestions on how to improve and/or expand your cash-flow.
Be sure to seek the advice of a financial planner with expertise in small-business cash-flow options. They will help you manage your
cash flow in the following areas: Generating additional income, structuring a retirement plan that can reduce your business and
personal taxes, and establishing a program that allows you to make more money from your business on a tax-advantaged basis.
With the right tools, tips, and resources, you can grow a highly profitable business.
© 2007 Proverbs Consulting - All Rights Reserved
Dr. Tamara Johnson, PhD, is the founder of Arlington, Texas based Proverbs Consulting. Proverbs Consulting offers a diversity of
professional business consulting strategies to entrepreneurs, small-business owners, faith and ministry-based, as well as, non-
profit organizations. Contact Dr. Johnson at info@proverbsconsulting.com or visit the website - http://proverbsconsulting.com
By Dr. Tamara Johnson
While it's not the most glamorous part of running a business, cash-flow management is arguably one of the single most important
facets of having a business. Of course it’s one thing to acknowledge and declare that cash flow is important. But it’s entirely another
thing to attend to the details that will keep your business in the black.
The key is, knowing exactly where to focus your cash-flow strategies. So now, let’s look at the following suggestions to help you
manage your cash efficiently and intelligently.
Cash is Still King
When you get cash in your hand, resist the temptation to spend it. And when you do spend, avoid spending it on fancy cars,
equipment, or clothes. Some entrepreneurs are far too quick to reward their hard work and relieve their stress with new personal
purchases. In some cases, they try to “appear” successful before they actually are.
There is much to be said about a business owner who delays self-gratification, pays attention to the “big picture,” and finally sees
business profits. Always use your cash to build the real, not the apparent, success of your business.
Payment Policies are your Friends
In many businesses, so much attention is paid to making the next sale that sometimes, “Accounts Receivable” is forgotten. After all,
payment policies and procedures aren’t much fun to think about.
Still, you must remember this: A sale is only good if you can collect 100% of what is owed to you. Otherwise, it ceases to be really a
sale and becomes a liability. So, as you seek new clients, ask yourself if they'll be able to pay you on time.
Polish Up your Bill Collecting Skills
The sooner you bill your clients, the sooner you'll collect the money that's owed to you, plain and simple. Your billing and collection
strategy should be to have a monthly or even weekly routine of billing. Remember that delinquent clients are often just as busy as
you are and may simply forget to pay. Often, the best way to collect is to make a phone call.
Whatever you do, try not to let clients go into default mode. The longer they go without paying, the less likely it is that they'll pay you at
all. If possible, try setting up an automatic deduction payment system with your clients' banks, much like the ones individuals set up
with their insurance or utility companies.
Get Credit Savvy
Got great credit? Credit cards can be an effective source for short-term financing, especially because you can usually get low
introductory rates for at least six months. But be smart. The trick is to keep track of when these introductory rates are over. Then you
can get a new credit card and roll the balance over into a low introductory rate.
Another way to prolong low interest rates is to call the credit card company and tell them that you're a loyal customer and would like
to continue using their card at the same introductory rate for another six months. However, you should be very careful about using
credit cards as primary or habitual sources of financing. I’m not advocating that at all.
Don’t be Afraid to Ask for Help
As much financial savvy as some business owners think they have, it is often good to get a second opinion. If you’re not sure about
which route to take, an expert can give you some great suggestions on how to improve and/or expand your cash-flow.
Be sure to seek the advice of a financial planner with expertise in small-business cash-flow options. They will help you manage your
cash flow in the following areas: Generating additional income, structuring a retirement plan that can reduce your business and
personal taxes, and establishing a program that allows you to make more money from your business on a tax-advantaged basis.
With the right tools, tips, and resources, you can grow a highly profitable business.
© 2007 Proverbs Consulting - All Rights Reserved
Dr. Tamara Johnson, PhD, is the founder of Arlington, Texas based Proverbs Consulting. Proverbs Consulting offers a diversity of
professional business consulting strategies to entrepreneurs, small-business owners, faith and ministry-based, as well as, non-
profit organizations. Contact Dr. Johnson at info@proverbsconsulting.com or visit the website - http://proverbsconsulting.com
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