As a small business owner, you’re making all kinds of things happen every single day – from wrangling supplies to communicating with clients. But even the savviest of business managers encounter a cash flow issue once in a while.
Here are a couple of tricks to help you master your cash flow.
1. Close the payment gap so you have money when you need it
Amidst the daily hustle, many small business owners overlook a key aspect of improving cash flow – reconciling receivables to payables. In other words, make sure money is coming in before money needs to go out. For example, if you allow your customers to pay within 60 days but you are required to pay your suppliers within 30 days, a payment gap occurs where you may not have money coming in when you need it. Closing the gap is especially important in small businesses where funds may be limited in comparison to large corporations.
2. Use digital banking to spread out your expenses
Our brains are wired to spread out positive occurrences while enduring negative ones all at once (the ‘rip off the band-aid’ effect). While making lump sum payments feels easier, this habit can wreak havoc on your cash flows. Consider setting up automatic monthly payments at various times throughout the month using digital banking, so you can have more cash available when you need it.
3. Shop for the best business savings rate
You’re ambitious about your business, so why wouldn’t you be ambitious about your money? Shop around to make sure you’re getting a good savings rate. At Summit, we offer a high-interest business money market account, which is ideal for when you’ve built a savings of at least $2,500. So get a great savings rate, and then move on to the next thing on your to-do list.
4. Talk to a business development officer
Your business is your baby. When it’s time to expand, find someone you can trust to help you explore your financial options. Summit business development officers are available to you as a resource – schedule an appointment and they can provide guidance on loan options and find a solution that works for you (and your baby!).
These four steps can help you own your cash flow and better your business in the process. Need a little extra support? You know where to find us!
