Let’s continue with our blog topic regarding how you can improve cash flow. Here is one very important step that you can take – Manage Your Expenses.
Cash will quickly vanish when you use it to pay all your bills at once. Manage your cash to pay expenses only when they are due and only when you need to pay them. Imagine that you had sufficient cash to pay off your car loan all at once. You may have financed it for five years. If you use all you cash to pay off your car you might have a feeling of fulfillment and satisfaction but find that you are now out of cash and cannot buy food to eat.
This is an extreme and hopefully obvious example of how not to manage your expenses but business owners call fall into that same sort of a trap to a lesser extent.
Many expenses can be deferred. In our example, all you had to pay was the monthly car note, not the entire balance. If you have a bill from a vendor that is due in 30 days – wait to pay it in 30 days. Don’t pay it immediately. Keep control of your cash in your hands as long as you can.
But you should of course be smart about paying certain bills. If a vendor has offered you a discount for early payment, take advantage of it. In this way, you will use less of your cash by taking the discount and paying a lower amount. This means more cash available to you and less going to someone else.