In a perfect world, we would always have enough revenues flowing in to cover our expenses. Unfortunately, this is no where near the reality that most business owners experience on a regular basis. Issues with billing and/or late-paying customers can definitely place our ability to meet our obligations in a timely manner in a financial choke hold. There are however a few things you can do to more effective manage your receiveables and expenses so that you aren’t caught in a financial crunch.
Project and track sales – by realistically projecting revenues/income for a specified period, you can plan and spend accordingly. Through tracking your sales monthly, you can quickly adjust your expenses should you find yourself not meeting your projected revenues.
Forecast your cash flow – while it may take a little time, analyzing when and how much your customers will pay you can help you in forecasting your cash flow. A general rule of thumb is the amount you forecast should be within 5% of your receivables each month. If you are way off, you may encounter a potential cash crunch around the corner.
Be prepared – its common for any business to experience cash flow fluctations throughout the year. Knowing when yours will occur allows you to take steps to plan for those leans months. Set cash aside to address those needs.
If budgets, projections, and forecasts just aren’t your forte, do not hesitate to call in a professional to help you. A few hours invested with a qualified professional can make all the difference in the world.