Three Critical Cash Flow Lines

I’ve helped many of my clients get focus on their cash flow and reducing costs. Sometimes, it’s more just how to manage key areas to ensure they still have cash in the bank.

Plan for big expenses

It’s natural for a big expense to come up in business; whether it’s a building expense, car expense, or perhaps a new hire. It’s hard to predict these types of expenses, but try to save and plan for them to happen. 

Set aside money for taxes

Taxes are an inevitable part of business in Canada. I recommend creating a new bank account for taxes; one for GST and PST (if applicable) and one for corporate taxes. If you’re not at a monthly remitter, it’s better to put this into a savings account with interest than give it to the non-interest bearing government ‘account’. 

Shorten the Accounts Receivable Cycle

It can be easy to have a lengthy accounts receivable cycle. If you’re uncomfortable talking about money with clients or customers, you may avoid the conversation or forgive them when they want 60-90 day terms. Instead, move the customer to ‘on receipt’ on 5-7 days.