Just as your body needs a healthy blood flow, a healthy cash flow helps to keep your small business alive and well.

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In fact, the right cash flow strategy will ensure your business always performs at its peak.

The cycle of paying your suppliers and employees, while at the same time collecting payment from your customers, needs to be carefully managed.

The first place to start is collecting money that is owed to you as soon as possible. This can be done through tight credit policies, identifying and avoiding slow-paying customers and even offering discounts for early payment.

On the flipside, money owed by your business should be paid as late as possible, without harming the relationship with your creditors. If a payment is due in 30 days, pay electronically that day, unless early-payment discounts are offered

Every little bit helps when you’re running a business, and simple steps like these can result in long-term cash flow benefits.

Preparing a budget is essential

It’s never too soon to prepare cash flow projections for your business for the year ahead. It allows you to see whether you have enough cash in your business to keep it going as and when you need it, or whether new sources of cash will need to be found.

You might also find it helpful to use previous cash flow statements to understand the comings and goings of your money in the past. Your accountant will be able to help you develop an accurate cash flow plan, and can also help with precise record keeping for operational and tax purposes.  Your bank can also help with this, along with many other cash flow issues.

For example, if you find that your business needs an injection of cash at short notice, a healthy cash flow can be a real asset in obtaining finance from your bank, even if your business doesn’t have substantial assets.

In fact, your bank can be of significant help when it comes to sorting out all of your cash flow issues. Suncorp Bank have recently put together the Perfect Package, a bundle of products designed with small business in mind. They also have attractive savings on offer when you take out the Perfect Package. To find out more, visit the Suncorp site or just pop into your local branch.