Manage Your Cash Flow – Part II

CashFlow-300x214Managing the cash flow of a company is important. Whether you are a large company or a small business, an inadequate cash flow is a strain on the growth of the business not to mention the strain it causes on the owner.

We previously discussed how to manage and improve the revenue coming into your business. We will now focus on your expenses and how to slow down the cash outlays.

Some of the ways you can slow down cash outlays include –

  • Take advantage of vendor payment terms. Don’t pay early unless you are given a substantial discount for doing so.
  • When you select your vendors, don’t select them just on price. Flexible payment terms from your vendors may offset the slightly higher price.
  • Communicate with your vendors and make consistent payments. This will sometimes allow you to negotiate a flexible payment schedule.
  • Reduce cash outflows by eliminating certain expenses. You should review your expenditures on a regular basis to determine if there are any unnecessary costs that can be cut.

In the third and last part of this series we will discuss how to determine your cash flow to plan for future shortages.