Business Cash Flow

Written by Patricia Tunstall
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Excellent cash flow is usually not a perpetual condition in most businesses. Working capital ebbs and flows, and cash may be plentiful for a short period, then inadequate to meet expenses. In fact, cash flow in small and medium businesses is often precarious despite the best efforts of an owner/manager to control it.

Cash Flow Management

Many startup businesses are operated by people who have a good idea, but little business training. Often, they don't have business plans, and they start their businesses out of love for the services or products without adequate capital. Unless they have come across the perfect niche enterprise and grow at a remarkable rate, they will undoubtedly run into serious cash flow problems.

Cash flow management courses are offered by the Small Business Administration (SBA), and business and community colleges. Often these courses are free or low-cost, and are given at night on local campuses, so they are convenient for working people. One of the prime tenets of these classes is that good cash flow management means you anticipate when your cash flow needs will occur.

If sales are slow in the summer, you are ready with resources to draw on for the extra cash you will need to meet payroll and pay expenses. When sales rise in the fall and spring, you have methods established to reinvest wisely in the business with capital outlays. Anticipation is the key. Know your business well enough that you anticipate payroll needs and debt payments. In the good months, put money aside to take advantage of market opportunities. When necessary, use short-term financing, such as factoring, to get over the times when cash flow is not at an optimum.

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Always refreshing to hear a rational aenwsr.