January 5, 2015
2015 Cash Flow is the Key for Business Success
During the year I often meet with business clients concerning their cash flow concerns. Most clients with slow accounts receivables, overdue accounts payables and low bank balances struggle financially and have larger than normal interest expense. What is the answer? I suggest the following:
- The principal should be reviewing accounts receivable on a weekly basis. He/she should be placing the call to outstanding accounts concerning any outstanding balances.
- Accounts payable need to be paid within a 30 day period of time.
- Principals need to make sure they are not drawing over budget with the business. Answer here is that the principals should have the mentality business before personal bills.
- Borrow when only extremely necessary.
- Asset life should be longer than the normal depreciation period.
- Meet with your CPA for accountability.
For the 25 years, I have been in business the clients that have followed the above agenda had the most financial success and spent less time focused on cash flow issues and more time focused on sales and quality of sales.