Small business owners must stay on top of their financial needs and determine whether they need additional funding through cash flow forecasting, which gives a short- and long-term look at the business’ financial future.
Here are three tips to make sure you stay on top of your small business’ financial standings.
1. Track Incoming Income
Small business income tracking isn’t as simple as it sounds. Chances are at least some of your clients are paying you on a net 30 to 90-day schedule. This payment cycle means that you’ll have a wave of highs and lows in your payments. This can be especially challenging if your clients receive their invoices all at the same time. As your business grows your payments may become more consistent, however if you’re experiencing major cash flow highs and lowsgiving your clients incentive to pay early may be an answer.
The incentive of a payment discount doesn’t have to be a large price break, since that may prove detrimental to your cash flow as well, however it may give just enough encouragement for a client to pay sooner than normal—helping to level out your income schedule.