The Five Steps of Avoiding Business Cash Problems

The Five Steps of Avoiding Business Cash Problems

By: Tl Kleban

As a small business owner, I get that sinking feeling in my stomach every payday. Every time it comes, I hate it. First there is meeting payroll and then sending out the other checks and if accounts receivable is lagging behind forget it. It’s a difficult task knowing how to manage and maintain business cash flow. You need to have cash reserves for those emergencies plus everyday expenses.

It is an uncertain economy with ever rising interest rates. The problem with small businesses is the fact they have little financial training and that is causing them to have problems staying open. A recent study showed 63% of new businesses don't survive six years after opening and the reason why is always bad cash management. Here five ways you can avoid having business cash issues in the future:

• Your first goal is to get your business off the ground and do it without spending a lot of money. You want to make a profit, even if it is a small one. Those big paychecks will come later on. If you start your business off by having a large office with a lot of employees and salary, you’re going to have a lot of overhead. That leads to you spending more money than you need to. Monitor spending from the start and you should be fine as long as it’s for operating expenses only.



• Keep track of the business’s growth. Often times, businesses grow faster than you’re prepared for and that leads to money problems. A lot of customers require more products, more employees and more hours to devote to the business. It’s scary how quickly you can start spending more money than you are making.



• Devote a set amount of time each week to figuring out how much money is making and how much you are spending. This is an easy way to avoid money problems that plague many businesses.



• Put together an incentive program for your customers. You can’t make any money unless your customers are paying you. An incentive program makes it easier and beneficial for them to pay you in full and on time. The idea is to have an incentive for customers to pay you as soon as possible, such as giving them a discount next time they do business with you.



• By far and away the best way to make money in business is to get it quickly as you can and then spending it as late as you possible. In other words collect money from your customers early on in the month and try to pay off your bills and debts towards the end of it. Many suppliers will even allow extensions on payments. This won’t damage your business’s credit history too provided they approve the extension plan. There are even suppliers that offer consignment plans. With these, you only owe on products after you sell them.

Merit Capital Advance looks at the big picture by offering a financing program that provides small businesses with fast business cash. It is the most convenient way to get a small business cash advance when you need it most. Visit Merit Capital Advance at www.meritcapitaladvance.com.

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