insuranceDo you have the cash to keep your business flowing?
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Do you have the cash to keep your business flowing?

A whopping 82% of small business failures are due to issues with cash flow. Accidents involving employees and customers can stop your growth in it tracks, or worse, shut your business down completely.

Are you covered?



Cash flow is money flowing in and out of business every month. Sometimes it appears that cash flow may seem moving from the business most of the time for some businesses. It does move both ways.


What is Cashflow

  • Money is paid to the business by customers for products or services by the business. If customers don't pay at the time of purchase, it may come from collections of accounts receivable.
  • Money is made out in payments for expenses, like rent or a mortgage, monthly loan payments, and payments for taxes and other accounts payable.


Cash vs. Real Cash

For certain businesses, such as restaurants or retailers, the business takes cash from customers and sometimes pays its bills in cash. Cash businesses will have issues keeping track of how it flows unless it is properly tracked and recorded in a journal. The most common tracking method is the cash registry machine, but they may not track income unless invoices or other paperwork.


A business is in a "surplus" situation when more money is coming in than is going out. Alternatively, when more cash is going out than coming in, the business is in a "deficit" situation and in danger of being overdrawn. When this situation occurs, the business will need to find money to cover the overdrafts.


Why Cash Flow is So Important

The biggest reason why small businesses fail is due to depleted capital. "Inadequate cash reserves" are the leading factor start-ups failed. A business operates with a lot of uncertainty. When the revenue does not flow as expected in a month or a few months doesn't mean it ends there, but when a business has no reserve for the period, it spells the end of the operation.


Why does cash flow matter?

Cash is the lifeblood of a business. There is a saying in business, "revenue is vanity, profit is sanity, cash is king."

Without capital on hand, any business will stop working. Managing a business cash flow is all about managing cash in hand, getting them faster, and control spending. 

Budgeting a cash flow is a foundational building block of business finances. Get the forecast done well will lead a path to improve efficiency, better margins, profit and grow a healthy business.


Starting a Business: Cash flow issues are most difficult when starting a business due to many initial expenses and without sales or customers. Having a large reserve of capital and a temporary credit line will help improve the cash flow issue. A new business must have at least six months of reserve to survive. Without sufficient capital through the initial period, the business is likely to fail. Without history, new businesses are not likely to get credit from suppliers, but on the other hand, customers may want to pay on credit, giving the new business a "cash crunch" to deal with.

How do you manage cash flow?

To make sure you've got enough cash flow to keep your business running, follow these seven steps:

  1. Bookkeeping Matters. Keeping close monitoring of bookkeeping is the best and fundamental way to understand all its financial transactions.
  2. Cash flow statements. Ask an accountant for help with the cash flow statement, or learn how to use spreadsheet software.
  3. Analyze cash flow. A business needs to understand how a cash flow works, how money is moving through the business.
  4. Manage a positive cash flow. Always ensure sufficient balance for payment and void penalty charge. Always look for a cheaper and alternative capital source when running low in cash flow ahead of time.
  5. Curb unnecessary spending. Avoid overspending to increase cash flow and postpone spending when cash flow is tight. Consider every purchase and paying for expenses at strategic times.
  6. Accounts receivable. If a business sells on credit, the account receivable must be closely monitored and collect all outstanding promptly for cash flow. 
  7. Regular Review. Often review and update the cash flow statement will help get at spotting opportunities to increase cash flow—and nip shortages in the bud.
  8. Risk Litigation. If a company heavily sells on credit, always consider purchasing ARI, Account Receivable Insurance. This would help the company manage risk should a big client get into default. The insurance would provide at least 90% uncollectible credit from the defaulted client.



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