Business Management Blog

Posts about business management to help you succeed
Business Management

Cash Flow: The Life Blood of Business

May 29, 2012

Posted by NASE Business Expert Gene Fairbrother - A basic management tool to keep your finger on the pulse of cash flow is a cash position report. While every business needs to be producing monthly profit and lost statements along with cash flow statements, these reports are monthly pictures while the cash flow report can be created every week or even every day to give you a flash picture of your cash position.

Start by setting up a spreadsheet on your computer with the following headings:

Month to dateTotal Sales, Cash-On-Hand, % of sales, Accounts Receivable,  % of sales, Accounts Payable, % of sales

Then, every few days, enter the respective amounts under the categories. Next, close your office door, turn off the phone, get rid of everything on your desk except the “numbers” and take an honest look at your cash position.

Are sales decreasing or stagnant?
Has cash-on-hand been on a decline?
Are accounts receivables increasing?
Are accounts payables increasing?

If you have any of the above symptoms, you have a potential cash flow crunch on the horizon and need to do something now! Don’t make excuses like blaming the economy because no matter what the reason, if you don’t find the cure, your business is in trouble.

Marketing Drives Sales
If sales are on the decline, you need to find ways to drive more money into your business.

Are you marketing to existing customers?
Do you know what marketing produces the most results?
Are you losing customers to the competition?

Are You Charging Enough
Are your prices keeping pace with the costs of doing business? Do a little detective work on your competition and find out if your prices are in line with the market demand.

Cut Out the Fat
When times are good most businesses have a tendency to build fluff into their costs of doing business.

Do you have surplus equipment not being used?
Are you employee efficient or do you have too many people to serve customer needs?
Do you need all those telephone lines, cell phones, or office space?

Shop for Better Prices
Every time you look at an invoice ask yourself, "When was the last time I checked to see if I could get this product or service at a lower cost"?

Compare prices for general operating expenses every few months.
Get several quotes on any purchase over $500.
Ask about price breaks for buying in quantity.

Are You Getting What You Paid For

Physically check all purchases to be sure it is what you ordered.
Check invoices for correct prices, what was actually received, and math errors.
Never pay from a statement. Only from original invoices!

Don't Let Inventory Get Out of Control
If your business has inventories develop specific par quantity levels to keep inventory moving. If your inventory exceeds par quantities or you have dead inventory on the shelves decrease upcoming orders or sell the surplus at a discount.

Pay Bills On a Regular Basis
Set a specific day each week to pay bills and only in an emergency write checks more often.

Will doing the above stop a cash crunch? Maybe or maybe not! But I will tell you that the majority of people the NASE business pros talk with who are in a financial crunch don’t have answers to the most basic cash flow questions about their business.

NASE Social Media

res-footer-facebook res-footer-twitter res-footer-linkedin

res-footer-blog res-footer-huffpost res-footer-youtube

Related News...

Keys to Protecting Your Ideas as a Business Owner
Business owners have ideas and other intellectual property (IP), and they need to protect them at all times. Otherwise, business owners risk losing IP to others who can profit from it. To some extent, it becomes virtually impossible for business owners to recover this property if not protected beforehand. With a clear understanding of IP, you can take appropriate measures to secure your business ideas. From here, you can use these ideas to grow your business.
Posted on Mar 07, 2022
How Managed Print Services Can Benefit Small Businesses
Managed print services (MPS) have long been a staple of big business. By handing over day-to-day management of in-house printing, companies can save themselves considerable time, money, and manpower. However, smaller businesses are increasingly turning to managed print services to streamline their document output. Provided you've chosen a reliable MPS, you look forward to improved quality control, guaranteed security of your printed assets, and dramatically lower printing costs. Interested in exploring the benefits of a managed print service for yourself? Below, we break down the key benefits for smaller businesses.
Posted on Dec 02, 2021
Employee Assessment Guide To Help Your Business Grow
Employees are a company’s driving force to move forward. That being so, their performance highly impacts and determines an organization’s success or failure. Finding ways to assess employee performance is very crucial. It helps bring out their best and helps an organization retain the best employees.
Posted on Nov 18, 2021
Want to see more news items? Click here  

Related Videos...

NASE Benefits At A Glance
As a NASE member you have access to MANY benefits designed to help you with your business needs. In this video John Hearrell talks about how to quickly see just what is available to you.
Posted on Mar 28, 2018
How to Deduct the Business Use of Your Vehicle
Will you be prepared at the end of the year to take your vehicle tax deduction? Are you keeping a mileage log in case of audit?
Posted on Jan 10, 2018
NASE Business Benefit Overview
Through your NASE membership, you will unlock countless doors that lead directly to one goal: Providing you the tools and resources needed to have a true business advantage in the marketplace.
Posted on Jan 10, 2018
Want to see more related videos?  Click here 

Still Have Questions?

Ask The Expert

Courtesy of