One of the make or break factors in an entrepreneur’s success is managing cash flow. Even when sales are doing well, if payment lags from key clients, your seemingly successful business can come under a lot of pressure.
I know the importance of cash flow and also, how daunting the topic can be for small businesses. That’s why I recently moderated a Google Hangout presented by Bank of America*, which included Rieva Lesonsky, CEO of Grow Biz Media and SmallBiz Daily, USA Today Columnist Steve Strauss, Viewpost CEO Max Eliscu and Bank of America’s Small Business Deposits Executive, Will Barr. Plus, I have been involved in the financial industry for two decades, so collectively, we were able to generate some amazing insights to make the cash flow management process an easier one for you.
You can watch the full event here, but some of the key takeaways included:
Build your relationships before you need them.
Understanding, managing and projecting cash flows isn’t easy, so don’t be afraid to ask for help. Leverage your relationship with your business banker as a great resource to help make sure that you are doing things accurately. Also, accountants and bookkeepers can help you through the process- and don’t wait to connect until you are in a bind. Being proactive and making accurate cash flow projections will help keep you out of trouble later.
Use technology.
Technology is your friend, from analyzing to tracking data. Viewpost offers helpful tools so you can fully understand your financials. Online accounting software can help you easily reconcile your accounts and keep track of where your money is daily. Also, accessing your business bank accounts and credit cards online, keeps you in touch with your financial position so you don’t end up with an unexpected surprise.
Practice cash flow yoga.
I always suggest that you practice something I call “cash flow yoga.” That’s having the cash come in quickly and go out very slowly, not unlike yoga breathing. To accomplish this, get your customers to pay as early as possible, whether through pre-orders, offering an upfront discount or requiring a deposit. At the same time, try to extend your terms with your vendors, so you can pay them more slowly. If you do this, you will find that your financial flexibility is greatly enhanced.
Have a backup plan.
Sometimes things just go awry, so you have to be prepared. If you can have an emergency cash backup fund on hand, Will Barr of Bank of America suggests that six months is a good rule of thumb. And at a minimum, have relationships with your business banker and others in place, so that if clients end up paying late, you don’t end up in a financial bind.
You can get more details on these tips and some additional tactics to help you be more successful in your cash flow projections and management by watching the 20 minute video of the event. Make sure to make the time to do this and pursue other strategic endeavors where you can work on your business, not just in it. It’s worth investing few minutes of your time to take your business to the next level!
*Disclosure: this company has a client relationship with CarolRoth.com or its affiliated entities
