Here are a few tips on managing your cash flow:
1. Don’t pay everything at once.
Stagger the payment dates by setting up three Groups:
Must Pay Group – These are payments required to operate your business like payroll, taxes, rent , water and Council tax bills.
Important to Pay – Items like utilities and insurance payments will often have a reasonable grace period.
Flexible Payment – Suppliers, vendors and wholesalers who supply most small businesses are the best sources of flexible financing. These suppliers will often continue to deliver as long as you keep open channels of communication and make payments with regularity.
2.Make it real!
Pay on revenue you have, not on the sales you are hoping to make. Only make payments knowing your sales are in the bank. If you know what you have, you will know what you can pay.
3.Discipline yourself to deposit all the sales tax money you collect into a separate bank account. You will then be able to pay the VAT when it is due.
4.Invest in a payroll service and Get creative with your payroll schedule so you can pay your employees when the money is in the Bank.
5.Establish relationships with a reputable credit provider. Plan for a rainy day. If you work with a quality company that provides working capital, stick with them and build a relationship. If they know you, they will be there to help quickly when you call.
6.Strengthen your relationship with your banker. Your banker may not give you a loan and may not provide you with a line of credit. Communicate with your banker and let them know where you stand and what is happening with your business. They often listen and could help.
