Cash Management Tips for Small Businesses
6 Ways to Manage Your Money
Managing cash inflow and outflow of a small business can be a challenge – especially if financial matters aren’t your professional area of expertise. Here are a few basic rules you can follow that will maximize your funds and help your business flourish and grow:
Don’t Pay Bills Until They’re Due
By paying bills closer to due dates, you free up more cash in the short term for things like payroll and taxes. Setting up auto bill pay in online banking is a great way to make sure bills are paid in a timely manner.
Send Invoices Promptly
The faster you collect money that’s owed to you, the faster you can use those funds to grow your business. Sending an invoice immediately after work is completed or goods are provided is ideal, but within 48 hours is a reasonable goal.
Establish a Line of Credit
Talk with your bank about opening a line of credit – having a line of credit gives you money on standby when you need it for business essentials. Use it wisely, however, because when you borrow on a line of credit, you accrue interest until it’s paid back.
Have Petty Cash
Petty cash can be handy for small expenses that don’t warrant writing a check. Just make sure you keep track of where it’s going – check out these guidelines for managing petty cash.
Deposit Cash Daily
If your business involves cash transactions, make deposits daily so you can put your money to work for you.
Invest Excess Cash
If you’re lucky enough to have extra funds in your accounts, put your money where it can earn for you – a simple and safe investment is a money market account.