Making It Happen
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Create systems for budgeting, receivables, and payables to establish how healthy the business is in a financial sense. Create a cash flow statement.
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Don’t perform work for customers that can’t be relied on to pay promptly. Share with all customers the terms of payment, including any incentives and penalties.
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Keep a close eye on both payments the business will be required to make and payments that could be delayed or deferred because they are not essential to current business operations.
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When the business is cash negative, don’t panic. As long as the business has predictable, reliable income from customers in the near future, a manager can access lines of credit—if he has been wise enough to establish those before they become a critical need. And when income arrives, such short-term debt should be paid down immediately.
Notes
1 “Small business economic confidence continues to slide. 2 in 3 small business owners rate economy as poor; 3 in 4 see it getting worse.” Discover Financial Services Small Business Watch, November 2008: www.discovercard.com/business/watch/2008/november.html
- Page 4 of 4
- Previous section When Cash Flow Dips
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