How to manage your cash flow

Your cash flow is one of the most important aspects of your business. If you are not careful, your cash flow can either make or break your business because they end up getting into a spot of trouble and can't get out of it because you do not have enough cash to handle the expenses. To prevent this from happening the best thing that your business can do is to manage their cash flow, so that you can have enough cash in your business to help you avoid any major problems.

Here are some tips that you can use to help manage your business's cash flow.

Tip one:
You need to practice something called prevention. Prevention is a simple process for businesses to use to help prevent the wasting of cash. What you need to do is to look far enough ahead in your business to see if you can spot any potential problems, such as a decrease in sales for a period, and then you do what you can to try to prevent the problem from happening. What you are doing is taking a close look at your company on a regular basis to prevent problems before they happen by ensuring that everything is running smoothly

Tip two:
The next thing that you are going to want to do is something called cure. How this works is that as soon as you are aware of a problem you will need to take care of the problem, instead of trying to ignore the problem and hoping that it will go away. This concept requires that you deal with things as the happen, which helps ensure that the problems are fixed in a short amount of time so they can do no further damage to your business.

Tip three:
Using a spreadsheet can also help your business determine what kind of revenue you will have each month and what kind of expenses you will have to worry about for the month. The spreadsheet budget can give you a great idea of what your cash flow looks like because you will be able to determine a month ahead of time if you will have enough cash left at the end of the month to pay the bills the following month.

Tip four:
Developing a great working relationship with your banker is another way to help manage your cash flow. The reason for this is that by keeping your banker up to date about what is going on with your business will enable them to spot any problems that you might soon be facing. By keeping your banker informed about your business the more information, they will have and the more confident they will be in your business. If your banker is confident in your business and you have a good working relationship with them they might be more inclined to help you out if you ever face a cash crunch.

Tip five:
If you are serious about managing your cash flow, you can also get a line of credit from your bank and keep it open. Just because you have an open line of credit doesn't mean that you have to use it, it should only be used in emergencies. With your business, what you are going to want to do with your line of credit is to use it as you would your overdraft for your personal checking account. An open line of credit is nice to have especially if your customers are a little slow at paying their bills. The reason for this is that you can pay your bills when they are due and then put the money from your customer's into your line of credit to pay back the amount that you used.