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Solving Cash Flow Problems
Article by Pete Cooper

General Cash Flow Strategy

Whether chronic or temporary, cash flow problems could mark the end of your business. If you can't pay off a debt in the extended time allowed, but you know you're going to receive $1 million the week after, this mightn't be enough. Let's go over a few general strategies to keeping your cash flow in order:

Have a good accountant. Whether you have a large group of accountants working on your books or just your mother preparing the figures to pass on to a lone chartered account, make sure they're good at their job. If your company has more than a couple of employees, having a good accountant should save you more money than the accountant will cost. They will also be more qualified to give you advice on tax loopholes and ways to avoid cash flow problems.

Be diplomatic and don't lie. If you can be diplomatic with your customers and those who you owe money to, you're half way there with solving your cash flow problems. Be honest with people you owe money to. If you can't pay back an installment on a loan within the time required, organize a deal and show them that you're definitely going to have money available to pay the installment at a later date. Most companies will deal with you if you're honest with them. After all, it's not in their interests for you to go bankrupt and be unable to pay off the debt.

Cut down your expenditures anyway. If you can cut down your expenditures just by a little each month, you can save up money to prevent future cash flow problems. Even if you're flush with cash in one month doesn't mean you will be the next. Try not to work on the brink of bankruptcy all the time.

Conclusion

Keeping the books balanced isn't as easy as it initially seems. Even if you have a great accountant, it's important that you can keep abreast with your financial situation. Even more important is that you can rationally deal with bad cash flow situations and invest your money wisely when your cash flow situation is good.

With that, I hope this has helped opened some eyes and proven to be a useful starting point to quashing any fears or uncertainty about cash flow and how to deal with it.

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