The TD Small Business Survey found that 78% of respondents identified cash flow management as a major barrier to success, putting cash flow management on the top of the barriers to success list (Market Talk, Maclean's, Oct. 22, 2012).
Yet the same article mentions a study by QuickBooks in which 20% of small business owners admit to either forgetting to invoice or failing to follow up on unpaid ones, while more than 50% of respondents say they are either not organized or lack an automated system for creating and tracking invoices.
Clearly then, good cash flow management starts with the basics - keeping track of the money, invoicing and going after the money you're owed.
To keep track of the money, first you need an understanding of the financial concepts vital to successfully managing a small business.
I highly recommend the Numbers 101 for Small Business series by Angie Mohr (Self Counsel Press).
Then, a top notch accounting system will keep the money organized and help you analyze your financials and spot trouble before it arrives. Top Accounting Software for Small Business presents what I think are the best for Canadian small businesses.
Invoicing, thanks to our tax system, is not the simple process that it should be. My article, How to Invoice in Canada, explains how to meet the tax requirements and provides models of the different invoices that different tax scenarios require.
Of course, good accounting applications let you prepare and send invoices easily from directly within the application.
As for going after the money you're owed, see these 7 Ways to Make Sure You Get Paid to help you set up the proactive policies that will make it easier for you to collect your account receivables.
And if you have policies or methods that help your business get paid faster (or at all) share your tips for ensuring you get paid here.
Image (c) Rick Audet