5 Ways To Avoid Cash Flow Issues In Your Embroidery Business
Having enough cash to run your embroidery business at times can be a real challenge but this is an area that you must stay on top of at all times. It is so easy to run on a day to day basis and forget how important managing your cash flow is to the overall health of your business.
Number One Way To Manage Cash Flow
The number one way to manage your cash flow is to get at least 50% down for each sale and collect the remainder on delivery or pickup of the finished product. This is the way that all Retail and Small Business accounts should be handled. Make sure you are making a profit on each sale.
Keep An Eye On Automatic Withdrawals
Do you have automatic withdrawals from your bank account? Stay on top of these to make sure that they are accurate and up to date. If the date that they are being withdrawn is causing you issues, ask your supplier to change the date to one that will better work for you. I found some programs on my statement that are no longer useful for me but the money was still coming out every month. If this is happening to you, cancel those programs. This one action alone resulted in $119.00 more per month in my bank account.
Keep Track Of Your Payments
Keep track of when your payments are due. If they are due in 30 days, and you do not have an early payment discount, pay them on the last day that they are due. This will keep you current wit your supplier and yet you can hold onto your cash as long as possible. Make sure that you pay them within the period that they are due to avoid having to borrow from your credit line or payment any interest on that payable.
Offer Early Payment Discounts
If you have contract accounts, make sure that they are current with their payments. If you offer them a small early payments discount, many will take advantage of it and pay early.
Create A Cash Flow Budget
Create a Cash flow budget or Cash Flow Statement that you will use on a daily basis. When you write a business plan you are required to write a Cash Flow Statement and many times it just stays with the business plan and never looked at again. Bad mistake! This Cash Flow Statement should be used and checked at least once per month to see if you are staying on track. If not make some adjustments.
Keeping a close eye on your cash flow or cash outflow will help to give you the cash that you need when an emergency arises or you find a special sale that you can take advantage of. Managing your cash flow can keep you in business much longer than just having a profitable business. A profitable business can go out of business just because they do not have enough cash to run with on a monthly basis.
Joyce Jagger
The Embroidery Coach
© 2011 Joyce Jagger, The Embroidery Coach
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“The Embroidery Coach, Joyce Jagger simplifies the complex world of embroidery into easy to understand lessons. Her passion is to help get the new embroiderer off to a fast start and help the existing embroiderer improve their skills so that they can provide higher quality embroidery and increase their profitability! Get her FREE Mini-Course “The 5 Mistakes Embroiderers Make” at www.TheEmbroideryCoach.com”
Learn How To Control Your Cash Flow In Your Growing Embroidery Business
I just received an article from my bank that would help you as you are learning how to control your cash flow in your growing embroidery business. If you are a one person shop some of this article may not apply to you, but now is the time for your to learn “How to Mange Your Cash Flow” and will help to give you the tools to be able to actually grow your embroidery business.
Many embroidery business go out of business because they lack the cash flow to keep them going especially during the tough times and to me this is very sad. I really hate to see this happen when it could be totally avoided with the right education and systems in place. Learning how to control your cash flow is a must if you want to stay in business and take your embroidery business to a level that will give you the profit that you are looking for in your business.
If you find this article helpful, please leave me a comment below. I would really appreciate it.
Joyce Jagger
The Embroidery Coach
