We have just recently over the past twelve months seen the bankruptcy rates sky rocket in America due to financial disasters. So its best to know even before you start a business is how to manage your money.



Here are some good tips for you to follow when managing your money.

Money Coming In

Its all very well having good sales all the time but when your customers don't pay on time this will effect your cash flow because you will have to put the extra money in to cover what your customers haven't paid you yet.

You can improve this by making sure that your bills are getting to your customers on time. Offer them something for prompt payments of their accounts like a ten percent discount on their next order.

Don't forget to do credit checks on your customers too this could be valuable information for your business because you don't want bad payers buying from your business.

Understanding Cash Flow

Banks, creditors, and suppliers will work with you if you get into trouble with your money when in a business. But before they will help, you must show them that you have a plan of getting out of it.

Unless you have a great understanding about your cash flow and how to work it out then your going to have a hard time explaining your situation to the financial institutions.

Monthly Obligations

If you have a lot of bills to pay each month try paying them over a longer period of time and give yourself some time to grow your business.

Always try and make extra payments when your business starts to grow and you star earning more money. Don't forget the quicker that you can get your loans payed off the more money to invest in your business.

Start An Emergency Fund

Experts say that you should build up an Emergency fund to last you for at least six months. If your income is fluctuating 12 months would be better. If this sounds a bit too much at first start little try and get two months ahead and them work from there. Don't forget bit by bit is better than nothing.

Separate Funding

When your looking at your financing try and include an emergency fund besides your business. This will come in very handy if you find that your getting into trouble with your finances or your having trouble getting paid from other sources.

Many banks will offer free checking accounts so take advantage of this and open your emergency fund with a new checking account.

Credit Cards

Many businesses can't do without credit and yours will be the same, try not to use a credit card instead get credit from your suppliers they will be happy to give you credit on your account they need the business too.

A lot of credit cards not have high interest rates that you won't be able to afford when your trying to run a small business.

Copyright (c) 2009 Charles Goldie