Your cashflow is like the heart pumping blood through the body of your business. Savvy entrepreneurs always know how much cash is coming into their business and when to expect it (see their advice on www.entreper.com) and producing a cashflow projection is an essential skill for any new business to master.
Pick out what money is coming in and what is going out. Often it's useful to divide the cashflow projection into short periods of a few months and most people do it for either a year or for a quarter of the year well in advance of that year and/or quarter.
Be realistic and it will help you gauge how you might cope in the event of any unexpected problems. It's also worth considering if you need to buy accounting software programmes to make the job easier for you or pay your accountant to do the cashflow with you if you are willing to pay the accountant's fees.
Your cashflow shows the opening and closing bank balances within a year or a quarter year as well as payments and receipts.
Once you've done your cashflow projection ensure your customers know what your terms of payment are, send out your invoices on time requesting prompt settlement and don't be afraid to issue a fine for late payments if you've made the terms of payment absolutely clear. Do run a credit check on any new customers so that you find out that you can trust them to pay you on time.
If you do run into cashflow problems it's always worth contacting folk you owe money to in turn and saying that you are expecting money in but it has been delayed and could they help by accepting a different payment arrangement from you until you resolve the issue. Negotiation is the key and do listen to what born business survivors say about this on www.entreper.com.
Don't be afraid to chase customers for non-payment and possibly think about an increased overdraft to see you through the lean time. Facing cashflow problems before they arise will usually act as a safety net for you.
By Theresa Roche
Entrepreneurship
hello@entreper.com
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