Does your business have CASH FLOW issues occasionally? We all do at various times. Good planning will help but not alleviate this issue. In an ideal world there are no immediate needs for cash and your clients always pay on time and you meet all your obligations when due. Most of us do not live in an ideal world.
The following solutions can be of help with current and long term planning, as well as in day to day operations.
Keep an emergency fund that will cover three months of your necessary expenses.
These funds should be readily available to handle emergencies without delay.
Replenish this fund as soon as possible after use.
Establish a Line of Credit at your bank AND/OR obtain a BUSINESS CREDIT CARD for
business use only. This solution will give you the ability to make the right decision
at the right time. The lack of CASH should not stand in your way to grow your business.
A business credit card can be used to separate business and personal expenses.
The new reward cards can also help you grow your business when reinvesting the
reward amounts into your business.
Quarterly Tax Payments can cause cash flow issues. Establish an IRS EFTPS account
with the IRS and make payments on a weekly or biweekly basis instead of quarterly.
It is easier to make smaller payments on a regular basis as the obligation occurs.
Negotiating with your vendors or clients is an honest tool to use when you have
an occasional cash flow problem. Call your vendor and tell them the situation and
set up an installment plan. The same idea is useful when a client is having a cash
flow problem. Getting timely payments is better than no payments at all.
The best run organizations can have CASH FLOW problems that occur unexpectedly. Be prepared to handle the situation.