Cash flow management separates thriving businesses from those struggling to stay afloat. Unlike profit, which is an accounting concept, cash flow represents the real money moving in and out of your business. A 2023 JPMorgan study found that 82% of small business failures stem from poor cash flow management. Companies must track accounts receivable, inventory turnover, and payment terms to avoid liquidity crunches.
Implement these proven tactics:
- Forecast weekly: Use tools like Float or Pulse to project cash flow 90 days ahead.
- Negotiate terms: Extend payables to 60 days while incentivizing receivables with 2% discounts for early payments.
- Maintain reserves: Keep 3–6 months’ operating expenses in liquid assets.
Advanced strategies include invoice factoring (selling receivables at 85–95% value) and dynamic discounting. For seasonal businesses, establishing a line of credit before lean periods is critical.