Cash management problems and solutions can be one of the biggest stress factors on most new business owners’ shoulders. Ideally, you’ll have more money coming in and than going out in any particular month. But the reality is, most small business owners find cash flow a feast and famine situation. If this happens to be the case for your small business, we have put together a list of simple cash management solutions to help you stay in the green from the first day of the month all the way to the 31st:
- Don’t be afraid to ask for a down payment. The good ol’ “You know I’m good for it” concept is a thing of the past. Throughout the recession, it became commonplace to expect cash upfront in order to do work. Not only is this an insurance policy that you will be compensated for your work, you can use the cash to cover your expenses until your work is complete.
- Accept all forms of payment. Many small business owners aren’t comfortable accepting credit cards because of the fee that is taken off the top. However, saving yourself the 3% fee and demanding cash can cost you a lot of business in the long run. Accepting credit cards is a convenient way to keep your cash flow moving smoothly.
- Make credit cards work for you. While we’re on the subject of credit cards, a large portion of small business owners find themselves relying on credit cards as a cash flow buffer. If you are in this category, you can double dip by using for a credit card that offers you rewards. If you put your business expenses on the credit card and then pay it off when you’re you receive payment from your clients, you experience little to no finance charges. If you do that with a credit card that offers rewards, you will get a small percentage back, or travel points, or the like.
- Automate your bookkeeping. You are probably neck-deep in work to keep your business afloat. It’s difficult to stay on top of invoicing, account management, deposits, and accounting work. However, getting behind on these crucial chores delays you receiving payment from your customers, or you shortchange yourself on money you are owed.
If you set up an automated process using simple scanners for business management, cash recycling systems, and automatic record keeping, the bookkeeping side of the business will stay up-to-date on its own. You don’t have to invest much in high tech equipment and scanners for business management. Unless you have a multi-faceted, complex operation, you probably only need the basic function cash management software; look for scanners for business management that automatically record and deposit checks, count cash, and produce reports for you. This type of technology can be as inexpensive as a couple hundred dollars. Beyond that, you just want to look for bookkeeping software that talks to your business scanner, and a few simple spreadsheets, and you should be good to go.
Do you have any cash flow tips for small businesses? Please share them with us in the comment section below.