By Kawania H. Wooten CMP
I teach a Hospitality Entrepreneurship class at a local community college and the final exams were held yesterday. While reading the exam answers last night, I noticed that everyone got one of the questions right, and that was “What are the 5 Rules for Keeping Your Business Cash Flowing?” I’m not surprised by that though — All new business owners want to know how to keep the cash flowing. Just in case you were wondering what the answers are, they are listed below —
1. Collect Cash as Soon as Possible. When you make a sale request a large retainer immediately or try to get paid on the spot.
2. Schedule Your Payments for the Due Date. Don’t pay any sooner than your due date. And, don’t pay after your due date — You want to keep your credit in tact.
3. Check on your Cash Balance Regularly. Always know what is going out and what is coming in on a daily basis.
4. Lease Your Equipment Instead of Buying It. Most of your equipment will depreciate almost immediately, and servicing that equipment when it breaks down can get pricey. So, consider leasing the equipment. Plus, the tax incentives are better with leasing.
5. Avoid Buying Inventory That You Do Not Need. It’s very tempting to fully stock your office or studio with equipment and supplies that you believe you will need eventually. To avoid having this inventory just sit in your office, only purchase it when you need it.