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Cash Flow Management

Sooner or later, most companies will not have enough cash to cover their expenses. Sales might be down for one quarter, or more likely, your accounts receivable team is still waiting on outstanding payments from particular customers or clients. It's a common problem that can be solved with careful cash flow management.

Analyzing Cash Flow
  1. Follow outbound and inbound cash closely and use that information to analyze cash gaps. Look into how these gaps occurred and when.
  2. Use cash flow data to project cash flow in the coming year to be better prepared for potential slow periods.
  3. Frequently compare expenses and sales to the cash flow projection in order to make adjustments in real time to avoid potential insolvency.
Cash Flow Management Tips
  1. Consider which expenditures might be deferrable until cash flow increases.
  2. Ask suppliers you have a good relationship with about financing options and delayed payments, so that you know your options. A simple phone call can win a 45 or 60 day net - or more - on payables..
  3. Manage your Days Sales Outstanding (DSO). This can mean sending out invoices sooner and making sure there is a specific due date on the invoice to prompt action or contacting key customers to negotiate terms for faster payment
  4. Be ready to take on debt. By showing a profit at tax time, you are in a better position to borrow money if needed.

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