Cash is your business’s lifeblood. Managed well, it keeps your company healthy and strong. Managed poorly, your company goes into cardiac arrest. Here are 9 cash flow rules you can implement that will transform the way you manage your business.
1.) Never Run Out of Cash. Running out of cash means failure in business. Make the committment to do what it takes so it does not happen.
2.) Cash is King. It’s important to recognize that cash is what keeps your business alive. Manage it with care and attention. It’s very unforgiving if you don’t. Remember, Cash is King, because No Cash = No Business.
3.) Know the Cash Balance Right Now. What is your cash balance right now? It’s absolutely critical that you know exactly what your cash balance is. Even the most intelligent and experienced business person will fail if they are making decisions using inaccurate or incomplete cash balances. That’s the reason why business failures are not limited to amateurs or people new to the business world.
4.) Do Today’s Work Today. The key to keeping an accurate cash balance in your accounting system is to focus on doing current work. When you do this, you will have the numbers you need – when you need them.
5.) Don’t Manage From the Bank Balance. The bank balance and the cash balance are two different animals. Rarely will the two ever be the same. Don’t make the mistake of confusing them. It’s futile to attempt to manage your cash flow using the bank balance. It’s a prescription for failure. You reconcile your bank balance. You don’t manage it.
6.) Know What You Expect the Cash Balance to be Six Months From Now. What do you expect your cash balance to be six months from now? This one question will transform the way you manage your business. This question really gets to the heart of whether you are managing your business or whether your business is managing you.
7.) Cash Flow Problems Don’t “Just Happen”. You would be shocked and amazed at the number of businesses that fail because the owner did not see a cash flow problem in time to do something about it. The key is to always be able to answer the question – what is my cash balance now and what do I expect my cash balance to be in six months from now?
8.) You Absolutely, Positively Must Have Cash Flow Projections. Cash flow projections are the key to making wise and profitable business decisions. They give you the answer to the all-important question from Rule #7. It’s impossible to run your business properly without them.
9.) Let Alternative Funding Options Eliminate Your Cash Flow Worries So You Are Free to Do What You Do Best – Take Care of Customers and Make More Money.