Cash Flow

Steps to monitor and control cash flow:

1. Do at least a summarized cash flow out to 12 months. I do a highly detailed cashflow for 2 months.
2. Offer customers incentives for early payments (sometimes the cash discount lost is worth the quicker pay...especially if vendors are pressing you).
3. Lease equipment instead of buying. Allows cash outflow to be spread out.
4. Monitor your inventory. Only keep on hand that which is needed for the short term.
5. Monitor spending...goes without saying.
6. Postpone hiring until absolutely necessary.
7. Avoid waste; recycle wherever possible.
8. Cap owners salaries to that which is reasonable for work done.

No one likes to do it; but whether it is a lean year or a good year, take a look and plug leaks before it is too late.