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As a business grows, so does the need for robust, dependable systems to track cash inflows and outflows. Methods that worked in the past may no longer be sufficient. At the same time, adopting certain practices may become more critical.
Help prepare your business for growth by considering these important tactics.
Knowing your exact income and where each dollar goes is especially important during times of transition. You should have a tracking method that is both well suited to your business and straightforward enough that you will use it consistently. Watching numbers closely can help you spot inefficient spending and head off problems before they arise.
Invoice clients as soon as a project is completed or an order has shipped, and note clear deadlines on your invoice. This is pivotal to maintaining a healthy cash flow, which is essential to managing growth. Follow up quickly on past-due accounts and re-evaluate relationships with consistently slow payers.
To boost your chances of securing capital when you need it, keep an eye on your business and personal credit reports. Lenders will consider both of these when reviewing a loan application. If you notice any errors, be sure to report them immediately. Take steps to improve your score, such as paying off existing debt and keeping accounts in good standing. Ask creditors not included in your profiles to report your payments — the more accounts you have in good standing, the greater the lift to your score.
Because a growth period can come with some uncertainty, it’s wise to try to shore up your business’ cash reserves in advance. Three to six months in operating expenses is typically a good amount to aim for. If you tap into your reserves while ramping up for growth, make it your goal to replenish them once your finances stabilize. If you can’t set aside the cash, ensure you have a line of credit in place for that added cushion.
We are committed to helping your business reach its potential. Our dedicated business banking professionals can help you find the right product to meet your business’ needs. To learn more, please call 1-800-428-7463, visit us online, or visit your nearest Citizens Bank branch.
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