Cash Flow Clogs

April 13, 2006

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A lack of sufficient capital is the most common dilemma for a new business. Working capital is the source from which all cash blessings flow; it's the blood of your business.

Cash flow is king. Even if profitability has eluded you, survival can be attained if cash flow is maintained. Planning around cash flow is essential.

When cash starts getting tight, sit down and determine what sources of cash are available and to what uses cash has been put. Prepare a cash flow budget worksheet to identify sources and uses, help you diagnose where the problem is, and guide you to its remedy.

Included in the Business Tools is a cash flow budget worksheet.

This is an Excel worksheet template you can use over and over again while still retaining a copy of the original form. This worksheet is formatted for use in projecting your cash inflow and outflow for a six-month period.

Once you download the worksheet, you can modify or customize it any way you like.

Do you have excessive uncollected receivables? Perhaps you're overstocked on some inventory? Can you make do with fewer employees? Improving your cash flow should be an ongoing effort on your part.

Work Smart

If you find yourself in a severe cash crunch, don't hide from your banker or your creditors. Since you owe them money, they are your partners and have a vested interest in your success. Communicate with them often, so they're confident the problem has your full attention.