We have all run short of cash. So, you won’t eat out till payday. But when your business runs out of cash, it’s not a joking matter. You can’t tell your employees to wait another week for payday.
There are steps you can take to find extra cash. But when you get too creative, you will have your conscience shouting NO! If your stomach turns because you aren’t sure if you should do it or not, the answer is DON’T. Here are twelve things you shouldn’t do. They will come around and bite you in the butt. Guaranteed.
- Don’t make promises you can’t keep, or next time no promise will work.
- Don’t break your promises. Your reputation is a key asset. Don’t squander it.
- Don’t lie – just explain your situation. Don’t exaggerate – reality is bad enough.
- Don’t depend on financial statements to tell you how your business is doing. Understand your cash flow. Your statement might say you’re profitable, but that doesn’t mean you have the cash.
- Don’t delay reconciling your bank account. That’s the true test of how much money is in your account.
- Don’t ignore small expenditures. They can add up really fast. An extra $100 a day for a business is not a lot, but that’s an extra $3,000 a month.
- Don’t overdraw your bank account – you’re better off not paying your suppliers than bouncing checks. That is the fastest road to becoming Cash In Advance.
- Don’t send out checks hoping a deposit will save you in a nick of time. Now checks clear the bank in only 24 – 48 hours.
- Don’t delay paying the government. An IRS lien will lock up every account you have – instantly.
- Don’t mess with payroll, You MUST pay your employees, your payroll taxes, and make your 401K payments. So, keep using your payroll service. They will keep you honest.
- Don’t send out checks without a signature. Sounds funny, but people do it.
- Don’t purposely over-advance your credit line. The bank will end up bouncing your checks.
Being short on cash is difficult. It will keep you up at night. Proper cash flow planning helps you stay one step ahead of problems. But make the right decisions. Heading down the wrong path doesn’t help. It leads to greater difficulties.
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