Managing Cash Flow | Utah Pulse

Understanding the disparity between cash and profit is critical to good management of any business. Without cash on hand, businesses will have a difficult time keeping daily operations moving. Cash flow is considered the lifeblood of any company.

Business owners need to not only focus on profit and growth but also emphasize sound cash management if they want to succeed. One of the things all business owners need to be clear about is the differences between a balance sheet and an income statement. (For more information on this, visit our Web site, resources.zionsbank.com.) Overall, it’s better for businesses to get money from a customer up front, pay bills at the last possible moment and manage inventory, accounts payable and accounts receivable more effectively so the business stays in top form.

Here are some tips on how to make this happen:

Prepare your customer orders quickly
Send the invoices the same day you deliver your products or render a service. You can use fax or email to do this, but make sure you don’t delay sending them.
Create a penalty system for late fees that is clear to all your clients. Make sure it’s printed on all your invoices.
Deposit checks the day you receive them. Talk to your bank about the features they may offer for this type of service. For example, at Zions, we offer business clients a same-day deposit service.
Be clear of the deposit availability schedule your bank offers and try to get the best one.
Do diligent research on your large customers such as asking for references, and call those references so you are aware of the client’s payment history.
Wait till the last possible day in the allotted time frame to pay the bills. This is because available cash flow is critical, especially if you want to get paid.
Make sure to reconcile your monthly bank statements to check for possible errors.

Remember, inventory sitting on your shelves is not cash, so keep moving it and regularly review marketing strategies to make this happen. These don’t have to be complicated but they should be a source you can utilize for moving inventory. Also, make sure to keep updating your recording system on a daily basis so you know where you stand.