With spring in the air, it's time for small business owners to review their balance sheets and find opportunities to improve the life blood of their business: cash flow.
"Successful entrepreneurs know that while their business may be profitable, cash is still king when it comes to growing their enterprise," said John Roberts, Vice President for Small Business at Scotiabank. "Putting a solid cash flow plan in place gives entrepreneurs control of what flows in and out."
Scotiabank offers five tips for making the most of your cash flow:
Understand Your Business Situation: Cash flow is an essential aspect of your business and its future success. You need a full picture of the factors that will impact your cash flow - including sales volume, payment terms, and business expenses. Scotiabank offers a Scotia Cash Flow for business Tool that can help you assess your current cash flow and create projections.
Be Prepared to Adapt: Your cash flow projection is something that will constantly evolve. Keep your accounting records up to date and create cash flow reports frequently to see what the impact of the changes could be. Whether you are expecting your cash flow to grow or shrink, knowing any change in projected cash flow gives you the time to create a financial strategy.
Identify Your Cash Flow Killers: Every business is going to have expenses, but there are methods to keep them under control. Regularly review your expenses and suppliers to look for ways to lower costs. For example, negotiating with your suppliers for early payment discounts or extended penalty-free payment terms. Using a credit card with an extended grace period can be an effective way to slow the payment process.
Take Advantage of Cash Flow Boosters: Consider loyalty credit cards that reward you for your everyday business transactions like purchasing office supplies, entertaining clients at restaurants and filling up at the gas station. Even small savings can add up to a large cash reward at the end of the year that you can reinvest into your company.
Read more from CPA Practice Advisor