Home
>
Small Business
>
7 Cash Flow Secrets Your Accountant Never Told You

7 Cash Flow Secrets Your Accountant Never Told You

Looking for ways to boost your cash flow? As a small business consultant, I make these recommendations to my cash strapped small business clients:

1. Shoeboxes are for shoes, not business records.

Pardon my candor but, you will never have a successful business if you don't systematically track your income and expenses, who owes you money, and who you owe money to. This is absolutely crucial. You don't have to have a big expensive computerized system, although a computer program like QuickBooks certainly does a beautiful job. You can keep track of everything with a pencil and paper if you like. But, you've got to track basic information in a systematic manner. Without this vital information your business cannot flourish and your cash flow will always keep you up at night.

2. Getting your customers to "show you the money".

The best way to get your customers to pay what is owed is to remove every possible excuse for nonpayment. Don't extend credit unless it's absolutely necessary. Establish credit policies to help determine who will get credit. Get an invoice into the bill payer's hand as quickly as possible after the work is done or the product is delivered. Don't be afraid to send a letter or statement or make a phone call reminding your customer his bill is due. Never be rude. Always be firm. Focus on preserving the relationship. If a customer has a legitimate gripe about your business do whatever you can to fix the problem.

3. Budget is not a four letter word.

Repeat after me, "Budgets are our friends." Seriously! A budget is a plan. It helps you stay focused on what you need to achieve. For example, you can use your budget to help you achieve sales goals, determine how much you need to spend on advertising, how much you'll need for materials, and if you can afford to pay overtime. Having a budget for your business is the difference between piloting a plane with instruments or flying blind in a fog.

4. A customer in the hand is worth two in the bush.

My very first customer is still with me. Over the life time of our relationship, she will be worth at least tens of thousands of dollars. Actually, she's worth far more than that because she refers business to me regularly. It's easy to get caught up in the search for new customers. But, never forget the ones you already have. What other services or products can you offer to them? How can you get them to refer their friends and colleagues to you? You can build a successful business around a small number of customers by providing them with excellent customer care and a range of solutions. Loyal customers are money in the bank, they're easier to work with, and it's less expensive to keep them happy than it is to find new customers.

5. The most powerful number in your business.

If you know only one number in your business it ought to be your Breakeven Point. Your breakeven point is the moment in time when your income equals your expenses. If your income is higher than your expenses, you have a profit. If your expenses are higher than your income you have a loss.

Why is this such a critical number? First of all, to find your breakeven point you need to know what all of your expenses are. How much does it cost you to produce your product or deliver your service? That includes how much you need to pay yourself. If your business isn't able to support you, you're not breaking even. Once you have your total expenses, you have a place to start. What do you need to do to achieve a level of sales high enough to cover your expenses? How many customers do you need to serve? How many products do you need to sell? If you can't reach that income level, what can you do to cut your expenses?

Your whole business plan can flow from that one number. You can use your break even point as a powerful business tool to make decisions about marketing, strategy, plans for expansion, hiring a new employee, etc.

6. How to make friends and influence check cutters.

Once upon a time, I worked for a corporation-yes, me, the quintessential entrepreneur. One of my jobs was working in Accounts Payable. All day long I got calls from vendors. Not friendly social calls, mind you. Angry calls. Irritable calls. Annoying calls. Vicious calls.

And then there were the friendly vendors. The ones who took a moment to treat me like a human being. Guess who I knocked myself out for? Guess whose checks made it through the labyrinth of bureaucracy and out the door? Uh huh. The vendors who treated me with respect. Is that fair? Not at all. But, it is human nature.

Take the time to get to know the folks that cut the checks. Don't be afraid to build bridges and establish relationships. You meet lots of interesting people and your cash flow will improve. One of my friendly vendors hired me away from the Cubicle City. I spent the next three years improving his cash flow from the other side. You just never know.

7. Why paying taxes is a cause for rejoicing.

The strategic approach of many small business owners is to have as little profit as possible at the end of the year. Otherwise, you'll have to pay taxes. So year after year, small business owners make decisions in their businesses based on intentional lack of profitability.

Now, for the majority of small business owners, what the IRS considers to be profit is in actuality your paycheck. Are you working to lower your paycheck? Would you put up with that from an employer? By putting up with it from your own business, you condemn yourself to a life of poverty just to avoid having to pay taxes.

I won't tell you that writing checks to the IRS is my favorite thing to do and I make sure I take every legal deduction I can, but if I'm paying taxes, it means I'm making money. I like making money. The bottom line is this: If you're paying taxes, it means your business is making money. Go out and make more! Don't let the thought of taxes hold you back. Think about it this way, even if you're paying fifty cents of every dollar to the government, that's fifty cents more in your own pocket. That's a good thing!

A word of caution: don't boost your earnings and spend it all. Make sure you plan ahead for the tax bill!

Caroline Jordan, MBA is a small business consultant and author of Mastering Cash Flow: A How-To Guide for Solving Small Business Cash Flow Problems. For more business success tips visit http://www.thejordanresult.com. To get in touch, call Caroline at (207) 583-2630 or send an email to http://www.thejordanresult.com..

quick home cleaning Glenview ..

In The News:

FBI warns cybercriminals are stealing family photos from social media to create fake proof of life images in virtual kidnapping scams targeting victims.

Instagram's new 'Your Algorithm' tool lets you control your Reels feed in real time. The app now gives you power to customize what videos you see.

Major Marquis fintech breach exposes 400,000-plus Americans' data through unpatched SonicWall vulnerability, with Texas hardest hit at 354,000 affected.

Free up iPhone storage fast by clearing large photos and videos from Messages app. Simple steps for iOS users to delete attachments without losing chats.

Scammers are flooding inboxes with fake tracking alerts that mimic real carriers, exploiting the holiday rush to steal logins and personal data.

The Fox News AI Newsletter brings you the latest news on AI technology advancements and the challenges and opportunities AI presents now and for the future.

Texas family reunites with missing 11-year-old cat Grayson after 103 days using Petco Love Lost's AI photo matching technology and community help.

Tired of AI customer service loops? These insider tricks help you escape "frustration AI" and get real human help when you need it most for urgent issues.

Unlock richer audio from your streaming apps with simple tweaks to volume normalization, equalizer settings, and quality preferences for cleaner sound.

Scammers are sending fake Facebook settlement payout emails that mimic legitimate notices from the privacy settlement administrator to deceive users.

Holiday shopping scams surge as fake refund emails target distracted consumers during Black Friday and holiday seasons, costing Americans billions annually.

The AI-powered IRMO M1 exoskeleton features four modes, including turbo, eco, training and rest for hiking, running, cycling and sports with eight-hour battery life.

OpenAI announced upgrades for its ChatGPT Images platform on Tuesday, saying the program can now make more precise edits and produce images more quickly.

Chrome for Android now turns web articles into AI-powered podcast conversations. Get hands-free browsing with Google Gemini's natural audio summaries.

LastPass faces $1.6 million fine from U.K. regulators after 2022 data breach exposed 1.6 million users. Password manager failed proper security controls.

Petco disclosed a data breach exposing customer Social Security numbers, financial account details, and driver's license information due to a software error.

Baseball teams can now analyze complete swing mechanics in normal training environments using Theia's markerless AI system that processes standard high-speed footage.

Smart home hacking fears overblown? Expert reveals real cybersecurity risks and simple protection tips to keep your connected devices safe from hackers.

MIT develops needle-free glucose monitor using light technology. Revolutionary device could replace painful finger pricks for diabetes management.

The ClickFix campaign disguises malware as legitimate Windows updates, using steganography to hide shellcode in PNG files and bypass security detection systems.

Researchers from Osaka Metropolitan University designed a 21-foot dome that combines aquaculture and hydroponics to create a self-sustaining urban food system.

The Fox News AI Newsletter gives readers the latest AI technology advancements, covering the challenges and opportunities AI presents.

ChatGPT data breach exposes personal info of users through partner Mixpanel. OpenAI confirms names, emails compromised in security incident.

Android rolls out Emergency Live Video for 911 calls, letting dispatchers see real-time scenes during emergencies. Great for holiday travel safety.

Malicious Chrome and Edge extensions collected browsing history, keystrokes and personal data from millions of users before Google and Microsoft removed them.