Surviving Interruptions In Cash Flow

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Among the most important aspects of running a business is cash flow. Often, businesses rely heavily on cash flow to fund their operations. Any interruption in cash flow can gradually imperil a business' ability to stay afloat to cover costs.

Some events can cause a partial or general interruption of income, and being prepared for these developments and responding appropriately can help businesses resume the flow of revenue.

In some cases, such as natural disasters, income interruption is caused by the full incapacitation of a business' operations. Having the necessary preparations for the disaster can help businesses resume normalcy in operations and thus, restore cash flow in the shortest available time. Business owners should also maintain a close relationship with a bank to open up lines of credit. This would help cover most expenses while the business gets back on its feet.

Outside of disasters, the most common of all sources of cash flow interruptions is a poor credit policy. While it is unrealistic to expect all customers to pay on time every time, it is a sign of poor policy for credit to be extended to customers with questionable credit ratings. A poor understanding of the paperwork involved may also impede the business' ability to deliver invoices and track customer payments.

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Businesses should have a clear understanding of the process of invoicing and have a strategy in place to efficiently deal with late-paying or non-paying customers to prevent problems such as these from growing out of proportion.

Drawing from more than three decades of industry experience, Brennan & Clark assists businesses in enhancing their existing collections strategies in a way that suits their needs. For more on the importance of maintaining cash flow, visit this Facebook page.