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Cash Flow is King….the life blood of a business. Especially now, you need to know what your cash flow will look like over the next several months. It might be time to ask your CPA to prepare a forecasted Cash Flow plan so you know how to naviagate the rest of this year. These are unique times, like nothing we have seen in our life times. You need a strong plan to realistically look at what your income will be over the next few months, how much of your outstanding receivables will you be able to collect, what expenses can you cut or reduce in order to stay afloat? That is what cash floww forecasting does for you. Borrowing money is not so easy. Pestering customers to pay has taken on a new tone. Everyone is trying to stay afloat and trying to have empathy for the tough situation we are all in.

Working with a professional accounting firm who utilizes integrated, cash flow forecasting tools that can calculate different scenarios might be just what you need right now.. It is more important than ever to know how to best utilize the cash you have and how to make adjustments that will get you through this crisis with enough left to rebuild on.. We can help.

Slow paying customers, seasonal revenue variations, an unexpected downturn in sales, higher expenses — any number of business conditions can contribute to a cash flow crunch. If you own a small business, you may find the suggestions that follow helpful in minimizing cash flow problems. Good Cash flow starts with good billing and collection practices.

Billing and collections 

Your employees need to work with clear guidelines. If you don’t have a standardized process for billing and collections, make it a priority to develop one. Consider sending invoices electronically instead of by mail. And encourage customers to pay via electronic funds transfer rather than by check. If you don’t offer a discount for timely payment, consider adding one to your payment terms. Now that you are getting paid, control your expenses.

Expense management

Know when bills are due. As often as possible, pay suppliers within the period that allows you to take advantage of any prompt-payment incentives. Remember that foregoing a discount in order to pay later is essentially financing your purchase.

Take another look at your costs for ongoing goods and services, including telecommunications, shipping and delivery, utilities, etc. If you or your employees travel frequently for in-person meetings, consider holding more web conferences to reduce costs. If expenses are controlled, then manage inventory to get the cash out of that asset.


Focus on inventory management, if applicable, to avoid tying up cash unnecessarily. Determine the minimum quantities you need to keep on hand to promptly serve customers. Systematically track inventory levels to avoid overbuying. If inventory is scrubbed, then move on to managing your debt.

Debt management

Consider how you use credit. Before you commit to financing, compare terms from more than one lender and keep the amount to a manageable level. For flexibility, consider establishing a line of credit if you do not already have one. You will be charged interest only on the amount drawn from the credit line. Now that you have done all you can, hire a CPA firm to ensure you mitigate taxes wherever possible.

Control taxes

Make sure you are taking advantage of available tax breaks, such as the Section 179 deduction for equipment purchases, to limit taxes.

Develop a cash flow budget

Projecting monthly or weekly cash inflows and outflows gives you a critical snapshot of your business’s cash position and shows whether you’ll have enough cash on hand to meet your company’s needs.

Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track. We can transform your accounting practices and get you to a place where you can grow instead of worrying about cash flow all the time. We work with businesses who are ready to transform their accounting process and then take it to the next level with strong, inspirational business consulting that will make such a change in how your think about your business, you will wonder why no one ever approached your business the way my firm does.

Post Author: Tricia O'Connor CPA MBA