Seven Cash Flow Tips to Keep Your Small Business From Going Under

by Jim Smith on July 24, 2017 · 0 comments

Cash Flow

Cash Flow

 

 

 

 

 

 

 

It goes without saying that a well run small business is one in which there is always enough positive cash flow to cover expenditures. There also needs to be enough cash to pay the government the amounts withheld from employee paychecks when they come due. Here are seven tips to help your small business avoid cash flow problems.

Ask for a Rent Reduction

You can’t afford to be bashful, so ask your landlord for a temporary rent reduction until the economy improves. The alternative is your going out of business and them having no tenant.

Better Vendor Terms – Accounts Payable

Your vendors also cannot afford to lose you as a customer. Press them for better terms and spread out the payments to them over a longer period. Money that you don’t have to pay them can be reinvested in your business.

Reduce Inventory

These days, it is much easier and quicker to replenish inventory. Keep the minimum quantity you need unless you can justify carrying more.

Collect Your Accounts Receivable

People owe you money and that is causing you to have to borrow to make your payments. Put the pressure on them to pay you as quickly as possible.

Use Credit Cards Wisely

If you have to charge business expenses on your credit cards, then do so at the beginning of the payment cycle. This gives you anywhere between 45 and 60 days to repay the debt.

Buy Used Furniture and Equipment

These days with all of the businesses that are collapsing, there are lots of really good deals on equipment and furniture out there. You can get really good bargains for pennies on the dollar.

Offer Your Top Employees An Equity Stake

If you are having problems making payroll, consider offering your top employees an equity stake in the company. Work is hard to come by and they need you as much as you need them. They may agree to taking less salary and a stake in the company just so they can retain their jobs.

Getting a good stream of revenue is only part of the game and does not guarantee success. The real secret to staying in business is understanding cash flow.  This allows you to be able to pay your bills and helps you  maintain a steady course towards your ultimate goal which is to grow your equity in the company.

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