Small Business Money Matters: Understanding and Optimizing Cash Flow

Cash flow plays a vital role in the survival of any business through all the stages of its life cycle. Nowhere is this more important during the buildup phase, where business owners must pay off debt obligations, pay employees, and stretch out the initial funds until the enterprise can get on its feet. Companies that fail to manage cash flow adequately within the first year of operations almost certainly fail to survive the following year.

As the business expands, the revenue accumulated would pay not only for the operational expenses but also serve as a gauge to determine potentials for growth. Frequent interruptions in cash flow can stymie development and may in extreme cases cause a business to grind to a halt.

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Cash flow management begins with finding the break-even floor, the point where revenues match expenses. Efforts must be made to break even, which may seem initially counterintuitive for those oriented toward profit, but would actually free business owners to pursue profit once all expenses have been covered. Payment capacity, in turn, should be based on actual revenues on hand rather than short-term profit projections.

Ensuring cash flow may also entail actively reducing and managing expenses. While some expenses can be eliminated from the onset (something lean startup advocates prioritize), others must be selected over others. Paying for everything all at once is a recipe for long-term disaster; whenever possible, businesses should get longer payment terms on loans and credit to reduce their initial monthly cost.

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Finally, business owners should make efforts to boost the amount of payments coming in. For sales-based businesses, this involves creative incentives to motivate employees to close more deals. Commission-based business-to-business enterprises should have in place a system to deal with the occasional late payments. Finally, businesses that offer in-store credit should have stricter requirements for any credit applicants.

Having behind it more than 30 years of experience in the revenue collections industry, Brennan and Clark works closely with clients to create programs that enhance their existing collections strategies. Visit this Facebook page for more on the company and its services.

Navigating Through the Process of Payment Collections

Payment collection is the awkward elephant in the living room that every business must eventually master.  Payments made on time are the lifeblood of the company, guaranteeing a steady stream of cash flow to cover operational expenses and invest in growth without squandering credit lines.

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Because making payments on time are an important matter, it is vital that businesses have the necessary information and documentation in place to assist in the process of collecting payments.  Documents like contracts and credit policies, for instance, can go a long way in reminding customers of the terms of the credit arrangement and schemes of payment.   Stricter protocol on credit should also be put in place to reduce the likelihood of extending credit to clients incapable of paying on time.


Though it may be awkward for everyone concerned, making a collection call or following up payments remain at the forefront of ensuring that payments are made.  It immediately provides feedback and allows for some degree of flexibility to reach a compromise when the situations demand it.


Finally, businesses should not hesitate to call in the services of a collection agency should the customer prove rather difficult to collect from.  Far too long a delay may make further attempts at collection difficult.   Having a competent collection service on call can prevent further losses to delayed and missing payments down the line. 

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Brennan and Clark goes beyond collections in providing clients with the needed assistance to secure cash flow and eliminate credit losses.  For more on the company and its services, visit this Linkedin page.