How to Manage Cash Flow in a Small Business According to Everest Business Funding

Can’t get a grip on business cash flow? As small business financial experts, Everest Business Funding says managing cash flow is critical for the livelihood of any company. Everest Business Funding is considered a small business owner’s trusted partner and strives to assist in supporting and expanding business operations by providing working capital. Its team breaks down the following five strategies that any business can adapt to survive and stay on top of the money that comes in and goes out of a business: 

  1. Forecast Expenses

Small business owners have to adapt to wearing multiple hats when running operations, so it can be tough to think about the future when the present demands an immense amount of attention. However, to most effectively manage cash flow, the future has to be considered and predicted. Forecasting expenses can help a business owner better gauge how much cash a business must bring in to break even and profit. 

  1. Forecast Earnings 

Just like the benefit of forecasting expenses, the same future thinking can be applied to predicting a business’ earnings. Forecasting how much money a business is anticipated to make month to month can help business owners prepare for busy seasons as well as slow seasons, more accurately aligning expenses with earnings to maintain stable operations. To help determine a forecast for both earnings and expenses, reviewing a business’ expense and earning history on a month-to-month or quarter-to-quarter timeline is key to gaining a starting baseline. 

  1. Reduce Expenses

After forecasting expenses and earnings, business owners should evaluate overall company spending, especially during slow seasons. Reducing overall business expenses can aid in cutting unnecessary costs and set a business up for cash flow success. An example of decreasing the amount of money that goes out of a business is leasing equipment rather than buying. This action focuses on decreasing short-term financial burdens and saves money when technology and hardware updates are occurring faster now than ever. 

  1. Boost Inventory Management

Managing cash flow and supervising inventory go hand in hand. Consistently adjusting inventory as needed based on sales as well as the season can be a strategy to match business expenses with earnings. Products that are not selling mean sitting cash, and sitting cash can harm cash flow. Improving inventory management can result in optimizing ordering with continuously updated recordkeeping or not making the mistake of ordering more inventory than needed. 

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  1. Prepare in Advance for Negative Cash Flow

Even with all the preparation or forecasting in the world, a business can always be subjected to a season when more money is going out of a business than a business is bringing in, otherwise referred to as negative cash flow. The recent global COVID-19 pandemic is a prime example of an unforeseen time that greatly impacted small businesses. To prepare for the unpredictable, a business owner should have a backup plan in advance for negative cash flow, such as opening a business line of credit when a business is in a state of positive cash flow or bringing in more money than is being spent. 

About Everest Business Funding

Everest Business Funding provides revenue-based funding to small business owners. They serve a diverse pool of businesses, from healthcare to retail, to help them obtain working capital to grow, buy inventory, launch marketing campaigns, or hire staff. Everest Business Funding’s clients are treated with respect and receive high-quality guidance and service from its professionals.

Disclaimer: This content does not necessarily represent the views of IWB.


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