Managing cash flow can be one of the most challenging aspects of running a small business. Controller onDemand recently started working with a small business who was struggling immensely with this task. On most occasions they could not meet payroll and had to delay it a few days or even up to a week. COD came to the rescue. After instituting a cash flow management plan immediately their payroll has been paid on time, every time.
“Never take your eyes off the cash flow because it is the lifeblood of your business” — Richard Branson.
Here are 4 easy steps to managing cash flow.
- Pay your bills one day per week. Look at what is due and pay accordingly based on what your cash allows you to pay. Containing bill payment to 1 day per week lets you look at the whole picture objectively and see what is most important.
- Open a line of credit. If you have payroll you should have a line of credit. I recommend that any business who has payroll has a line of credit as a backup. One thing you must always pay is your payroll. You cannot miss payroll.
- Keep some cash in reserves. If you do not have a line of credit as a backup to cover your payroll demands, make sure you keep some cash in reserves after paying your bills to be able to meet your following week payroll demands.
- Look at your receivables. Can you nudge anyone who is past due to pay their outstanding invoice? Gentle reminders and/or statements can sometimes bring in more cash. Also review customer paying habits to predict what checks/payments will arrive next week.
Or let Controller onDemand create a cash flow plan for your company.