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Go With The (Cash) Flow
By Marc Tracy
A weak economy...even weaker credit markets...never has wisely managing cash flow been more important for a business. If the idea is to ride out the recession by hunkering down, maintaining self-sufficiency (e.g. not going into debt), and still taking in enough to live on, then managing cash flow--making sure you have enough of the liquid stuff on hand when you need it to keep your business going--is of paramount importance.
Entrepreneur offers a cash-flow management guide, and the OPEN Forum (published by American Express OPEN, our sponsor) runs another.
We'll let you read the two, but the one broader take-away from both is that a crucial aspect to securing adequate cash flow involves very basic interpersonal relations. For instance, both guides urge trying to secure your accounts receivable as soon as possible, which is obviously eminently sensible. But how do you do that--how do you get your customers to pay up ASAP? The smartest way is probably just to use the relationship you've built up with them to explain your situation and urge them to help you--and, by extension, help themsleves, who may rely upon you--by paying up as soon as they are able. And in fact, on the opposite end, if you have good relationships with your vendors you might be able to persuade them to let you extend your accounts payable deadlines to a time when your cash flow would be less severely interrupted.
Oh, and cut costs where you can. But you're alredy doing that.
Comments (0)June 2, 2009 3:24 PM
