Friday, August 12, 2005

"Cash Flow Survival"

A company must create cash flow to survive. Many business owners don't realize that even a profitable company can go bankrupt with out cash flow. Profit is simply an accounting principle, don't get too enamered with it. You don't pay your bills or employees with profit.

Cash must be flowing in at the right time as well. You pay your employees each week, and your bills each month yet your customers pay you every 60 days. This will create a cash flow lapse that must be planned for. This is where cash flow forecasting comes in.

Cash forecasting is a record of known expenses in future months. This record helps business owners avoid overspending when a big check arrives and being left for broke when the annual insurance bill is due. This planning allows companies to catch profit oppurtuinties, and avoid hurting its credit rating and going bankrupt.

Here are some great tips for developing your business's sales forecast:,4621,321257,00.html


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