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The Importance of Business Cash Flow Management

As with most businesses (especially small business), cash flow is critical to ensure funds are available to meet your operating needs. Without effective cash flow management, a business faces several problem areas, such as cash shortages, inability to pay bills, bankruptcy, or even business failure.

Cash outflows and inflows each happen on their own cycles. Many times, cash inflows lag behind cash outflows, leaving your business short of money. This is known as a “cash flow gap.” With a large gap of this nature, your outflow of cash may not be covered by a cash inflow for weeks or months.

Cash flow is one of the most vital elements in the survival of a business. It shows where a company may be headed. Instead of hoping everything will work out, you can enhance your cash position with Invoice Factoring from Charter Capital. When you can predict or even control your cash flow, you are in a much better position for continued business success. In today’s credit strained economy, Charter Capital is your alternative business financing solution.

Ways Companies Can Increase Cash Flow for their Business

Common methods include:

  • Sell Accounts Receivable to factoring companies for instant cash.
  • Pay your suppliers slower, perhaps for an additional few weeks.
  • Reduce salaries, but supplement with stock options.
  • If you own your business property, consider selling it and leasing it back.

 

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