Make no mistake; the viability of your business depends on how well you manage your cash flow.  Many businesses have failed because they have not paid attention to a task so routine yet vitally important.  Mistakes that are made and not immediately corrected are carried forward and escalate until the business can no longer continue.  You can prevent these mistakes or, should they occur, you can start remedial action if you know the whys. 

During the conduct of your business, your income, less your expenses, represent your net income or net deficit.  Add that to your available cash and if it results in a negative number, you obviously do not have enough cash to support your operations for that period of time.  Particularly as a business startup, you will have times when your expenses outweigh your income and you will need to be prepared to fill that deficit from somewhere, be it a bank loan or a line of credit or from the sale of assets in your business.  You are well aware of the consequences of finding yourself unable pay your suppliers or employees should you fail to provide the funds in times of a cash deficit. Your Cash Flow Projection is the tool for you see when you need to source funds to cover shortfalls and when to invest surplus cash, when you need to delay payments and when you need to increase your credit collection.

The three parts of your Cash Flow Projection are:

I.  Income

Cash from operating activities, cash from investing activities, cash from financing activities.

II.  Expenses

Rent, salaries, purchases, loan repayments

III.  Opening and Closing Cash Balance

Cash surplus from the previous period or bank balance

Here are a few Cash Flow tips:

• Budget, budget, budget!  Draw up a budget and try and stick to it.
• Put together a credit policy and get clients to pay earlier by giving them incentives or discounts. 
• Get a line of credit from the bank.
• Pay bills on time so you don’t get slapped with interest. 
• Put extra cash in an interest-bearing account
• Accept credit card payments.  Customers can then pay for their goods immediately.
• Increase your sales