Cash flow is the reason you are in business. It is also the ultimate indicator of success or failure. If you have cash flow problems, you are not alone. Plenty of businesses go through multiple slumps, and with the times being as hard as they are, I assure you that you are not alone. There are a few things that you can do to help maintain a healthy cash flow when times are tough. Let’s take a look at what cash flow is and how to keep it on the up-and-up:
What Is Cash Flow?
Cash flow is a fancy (and more comprehensive) term to describe the money that your business brings in. A healthy business cash flow means that your business makes enough money to turn a profit while covering all expenses that your business entails. Negative cash flow means that your business is making money, but that the money that it makes is not sufficient to pay the bills or cover the overhead costs of your business.
Avoid Inconsistent Clients
One of the things that I have learned is that inconsistent clients can bring hardship later on. Having inconsistent or wishy-washy clients means that you cannot always count on them for consistent business. Having gaps in revenue can be devastating. You need to be sure that the clients that you take are consistent and ready to commit to regular business.
Spread Out Payments
It is never a good idea to allow coinciding payments. Having the minimum amount of money leaving your business accounts at any given time is always best. When you have multiple payments occurring at the same time, it is hard to know exactly what is going where. It is also harder on your finances for large sums of money to leave all at once. If you can stagger your payments, you will be in a lot better shape.
Keep Accurate Records
Keeping accurate records will give you a clear picture of how your business is doing. It will also allow for maximum reimbursements come tax season. Another benefit of keeping the most accurate books as possible is the peace of mind that you will not run into any trouble with the IRS. Small mistakes can add up quickly, cost you money, and even cause legal trouble.
Hiring a professional bookkeeper can save a lot of hassle and a lot of time. I know from experience that time is money. If a task like bookkeeping is keeping you from giving your business the attention that it needs, it can cost you money. There are always important decisions to be made. If you know exactly how your finances are holding up, you can make important decisions as soon as they arise.
Hire the Best
When it comes to entrusting someone with the financial health of your business, you should not settle for second best. You will need someone who can report accurate figures on a regular basis. Communication is key. Be sure that you have a good rapport with your bookkeeper and have the opportunity to communicate clearly and effectively with them.
BlueFire Accounting has the experience and expertise that your bookkeeping requires. We are committed to reporting to you throughout the year, not just at tax time, and to doing so in a way that is easy to understand.
Be sure to check out our website in the link above and set up your free strategy session. The best plan is to have a plan. Be prepared to take your business to the next level with the organization that it deserves.