Companies that are growing successfully may be subject to problems with cash flow. The owner may be hiring more employees and increasing inventory to keep up with the new sales in the business. This may lead to cash shortages. The lack of cash can prevent the business owner from being able to pay bills, plan for the future and grow the business.

Cash flow is the lifeblood of your business. Your business growth can be stopped if you don’t manage your cash flow. Basically, cash flow is defined as the cash coming in and going out of your business at a point in time. It is similar to your personal checking account. You look at the amount you have available to pay the bills when they are due. It is best to estimate your balance as far into the future as possible so you are able to predict when you will need more cash. Managing this is an on going process.

Develop a good cash flow management system and use it regularly. Most businesses update the cash flow projections monthly, but depending on your business you may need to do so more frequently. Identify the time of the month when you need to have money in the bank. Complete a cash flow statement. This will help you see when you are expected to have cash and when you will probably need it.  Doing this will help you deal with problems before they develop and lessen the severity if problems do arise.

If you find you are having cash flow problems, here are some options.

• Control spending and waste
• Hold off hiring new employees
• Keep inventory levels low
• Delay paying your bills
• Actively collect customer bills
• Ask for discounts from vendors
• Raise your prices
• Charge late fees
• Lease rather than buying
• Borrow from personal accounts
• Factoring
• Use a line of credit from a bank

This article may not be used without the permission of the author, Denise Kirk-Murray.