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Slow cash flow is one of the leading causes of insomnia for business owners. Even if sales are strong, a lack of liquidity to pay bills and cover payroll can cause more than a few sleepless nights. The good news is that you can rest easier by exercising sound cash flow management.<\/p>\n
Scrutinize your cycles<\/strong><\/p>\n Broadly speaking, nearly every business \u2014 no matter what it does \u2014 has two cycles that determine how the dollars flow. These\u00a0are:<\/p>\n 1. The selling cycle.<\/strong> This is how long it takes your business\u00a0to:<\/p>\n Good accounts receivable processes \u2014 from clearly and accurately invoicing to implementing online payment methods for faster access to money \u2014 are a major aspect of cash flow management.<\/p>\n Less experienced business owners often underestimate the length of the selling cycle. Many a start-up has been launched with a budding entrepreneur believing the company could get its wares to market, close deals and earn revenue quickly. Grim reality usually followed.<\/p>\n However, even business owners who\u2019ve been around for a while can miss changes to their selling cycles. Regular customers on whom the company depends may start taking longer to pay, or a key employee might jump ship and be hard to replace. Inefficiencies such as these are often exposed when economic conditions deteriorate.<\/p>\n 2. The disbursements cycle.<\/strong> This is how your business manages regular payments to employees, vendors, creditors (including short- and long-term financing) and other parties. As payments go out, cash flow is obviously affected.<\/p>\n Track the timing<\/strong><\/p>\n The selling and disbursements cycles aren\u2019t separate functions; they overlap. But if they don\u2019t do so evenly, delayed cash inflows can create a crisis. You want them to match as evenly as possible. Or better yet, you want to convert sales to cash more quickly<\/em> than you\u2019re paying expenses.<\/p>\n How can you keep tabs on it all? First, study your statement of cash flows whenever your company\u2019s financial statements are generated. But do more than that. Regularly create cash flow statements. Despite their similar-sounding name, these reports are run more frequently \u2014 usually monthly or quarterly. You can also use financial software to set up a digital dashboard that displays weekly or even daily cash flow metrics.<\/p>\n Take control<\/strong><\/p>\n If you see warning signs of an imminent cash crunch, consider these options to better control the potential crisis:<\/p>\n Slow down growth.<\/strong> Rapid growth can be both a blessing (you\u2019re selling more) and a curse (you\u2019re spending more on production). Cash shortages often result from a substantial mismatch between the selling and disbursement cycles, which can easily occur during high-growth periods. Out-of-control growth can also impair quality, which, in turn, sours relationships with customers and hurts your company\u2019s reputation in the marketplace.<\/p>\n Review expenses.<\/strong> Sometimes, you can lower monthly cash outflows by converting costs from fixed to variable. Fixed expenses include mortgage or lease payments, payroll, and insurance. When an employee quits, consider using an independent contractor to fill the position. Or if a key piece of equipment breaks, explore leasing rather than purchasing. In addition, review your company\u2019s tax planning strategies. A lower tax bill can make a big difference in cash\u00a0flow.<\/p>\n Address asset management.<\/strong> How much money are you making for each dollar that\u2019s invested in working capital, equipment and other assets? By monitoring turnover ratios, you may be able to identify and reduce weaknesses in asset management. For example, an increase in \u201cdays outstanding\u201d in accounts receivable might improve with tighter credit policies, early-bird discounts or incentives for employees who handle collections.<\/p>\n Essential skills<\/strong><\/p>\n Strong cash flow management skills are essential to running a successful business. We can review your sales and disbursement cycles, improve your financial reporting, and identify ways to manage your company\u2019s cash better.<\/p>\n \u00a9 2025<\/em><\/p>\n <\/body> Slow cash flow is one of the leading causes of insomnia for business owners. Even if sales are strong, a lack of liquidity to pay bills and cover payroll can cause more than a few sleepless nights. The good news is that you can rest easier by exercising sound cash flow management. Scrutinize your cycles […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,14,10],"tags":[8,11,12],"class_list":["post-17233","post","type-post","status-publish","format-standard","hentry","category-articles","category-business","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17233","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=17233"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17233\/revisions"}],"predecessor-version":[{"id":17234,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17233\/revisions\/17234"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=17233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=17233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=17233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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