3 Signs That You’re Losing Control of Cash Flow
Cash flow is defined as “the net amount of cash and cash-equivalents moving into and out of a business,” and it’s something that many business owners struggle with. If you’re experiencing any of these signs of cash flow trouble, it’s time to take action.
1. Messy or Nonexistent Records
It’s easy to put bookkeeping on the back burner when you’re busy, but without accurate records, there’s no way of knowing if your business is making a profit.
Whether it’s a ledger, a spreadsheet or a cloud-based accounting program, you need some concrete way to keep track of income and expenses. Clear, up-to-date records can reveal potential problems at a glance and give you time to correct small imbalances before they spiral out of control.
2. Lack of a Concrete Spending Plan
You can’t expect to maintain good cash flow if you dole out money without regard for how much you’re spending.
Expenses such as inventory, supplies, loan payments and employee salaries are all predictable, but you also need to be ready for emergency repairs to equipment or a sudden drop in sales. Plan expenditures in advance and be diligent about sticking with the budget you establish so that you always know how much cash is going out.
3. Too Many Loan Payments
Loans are a fact of life for many business owners. It’s rarely possible to cover all of your expenses with the assets you have on hand. Even when cash flow is good, you might find yourself needing a little help with unexpected large expenses or new projects you want to start. However, loan payments can stack up quickly and start to make a dent in your profits.
Paying out a good chunk of what you make every day establishes a vicious cycle of debt that can be difficult to get out of. Before these payments cut into your bottom line, sit down with someone at the institution that issued your loans. Find out how options such as refinancing can make it easier to pay off your debts before these payments cut into your bottom line.
Through ARF Financial you can speak with an experienced business loan consultant in your area who can offer excellent options for refinancing your debt and lowering your payments. Or, visit our loan calculator to find out how much you qualify for and request a FREE, no-obligation quote.
Establishing good cash flow practices means running in the black rather than running around looking for another way to stretch your budget.
Hiring an accountant or a bookkeeper eases the burden of monitoring the books and gives you the assurance of knowing that someone is always watching where your cash is going. Even if your cash flow is slipping out of control now, it’s not too late. All you need is a little help and a fresh perspective to get your business back on track.