Managing the flow of cash for your small business can be incredibly stressful, especially if your creditors are hounding you or your employees are waiting on a paycheck. But fixing your cash flow problems doesn’t have to be difficult. For the most part, making sure you have the money you need at the right time comes down to taking a few simple precautions and being educated on what’s causing your specific cash flow issues. Here are five ways to get your business back in the black so you can stop worrying.
Eliminate Unnecessary Overhead
If you don’t need it, you shouldn’t be paying for it. That’s the bottom line when it comes to cutting out all those little expenses that chip away at your hard-earned dollars. Don’t assume that you need something just because it seems like a professional businessperson has got to have it. Do you really need physical business cards? Maybe not. What about an office? Perhaps it wouldn’t be a problem to work from home. Have your vendors talked you into paying for an upgraded product or service that isn’t benefiting you? Don’t feel bad about letting them know it’s no longer in your budget.
Make Sure You Have a Cash Reserve
Despite the safety net of a good contract, you may have a client who pays you late–or worse, not at all. When a deal falls through and you don’t get the funds you’re expecting, it’s a lifesaver (and often a business saver) to have a cash reserve that you can rely on. Play it safe so that you can sleep at night knowing you’ve got yourself covered in case of an unexpected cash shortage, and don’t forget to make replenishing it a priority if you do need to use it.
Keep Your Taxes Under Control
Stay organized throughout the year by using an app to track your business expenses, then hire a professional at tax time to make sure you’re taking every last deduction that you’re entitled too. It’s important to give Uncle Sam his due, but your suppliers and employees need to be paid as well. Perhaps you’ll find that paying quarterly taxes is easiest for you, or maybe it will be simpler for you to pay them all at once. Whatever you decide, make sure to strategize with your accountant or tax preparer so that you’re running a lean operation with no extra dollars flying into the pockets of the IRS.
Use Technology to Track Cash Flow
If you’re using a ballpoint pen and a college-ruled notebook to keep track of your expenses, it’s no wonder that you’re struggling with cash flow. There are so many high-quality inexpensive (or even free) types of accounting software and services to keep track of who you owe, when you owe them, and how much you need to cough up when the time comes. Not sure where to start? While Quickbooks is probably the most well-known, you won’t go wrong with other options like Freshbooks, Xero, or Wave Accounting (that last one’s free, so you don’t have any excuses not to try it if money’s tight).
Don’t Keep Extra Inventory on Hand
Your goal is to meet demand–and no more. Run out of stock on a popular item? You can just let your customers know when you expect to get it back in stock, and even consider rewarding them (if you can afford it) with some small additional benefit. It’s better not to use up your cash (and your space) on extra product that you can’t guarantee you’ll be able to move. If you do end up with extra inventory, quickly offer a sale or discount so it will fly off the shelves quickly and pad your wallet.