Marita Bon Article
|Marita Bon, executive editor and co-owner of Bon's Eye Marketing, has more than 23 years of business, news and corporate writing experience. The founding editor of Wilma!, Wilmington, N.C.'s only women's magazine, she has contributed extensively to area newspapers and business journals.|
A Few Simple Changes Can Stabilize Cash Flow
Ask most business owners to name their biggest cause of sleepless nights, and they’ll sum it up in two words: cash flow.
Cash flow is the movement of funds in and out of a company. Positive cash flow means revenues are coming in at a pace that allows you to pay bills, meet payroll and invest in corporate growth. Negative cash flow means you are spending more than is coming in, even if – on paper – you have sufficient receivables to cover expenses. It’s simply a matter of timing.
In an ideal world, you’ve already run a cash flow projection, which estimates all expenses and revenues for a prescribed time frame. If you haven’t, then it’s a good idea to do it now.
Begin by calculating total monies you’ll have to work with over, let’s say, the next three months. To arrive at a realistic figure, add cash on hand to anticipated income from client payments, interest, debt collection and other sources, along with scheduled receipt dates.
Next, list projected expenditures and due dates, including wages and benefits, taxes, credit card payments, rent, utilities and other items. The resulting data will show where your money is coming from and going to, and likewise provide a blueprint for structuring inflow and outlay over that period.
Meanwhile, implement some additional measures right away to shift the tide from negative to positive territory.
Finally, remember that establishing and maintaining a healthy cash flow takes time and self-discipline. Start with a few basic changes, and watch your situation improve bit by bit.