You don't always have to get a loan to get more cash. By monitoring your company's cash requirements you can see a pattern of cash overages and shortages for the coming months and plan accordingly. Every business has a cash flow cycle: cash flows out to pay for production expenses and accounts payable and cash flows in from receivables. To reduce the number of bottlenecks and leaks in cash flow, review every revenue and expense item to answer these questions:
- Is the item necessary now?
- Can the receipt be accelerated?
- Can the disbursement be delayed?
Converting cash flow problems into cash management opportunities helps you to improve liquidity, strengthen your balance sheet, and pay lower financing costs.