Cashflow is a key component to everyday life, let alone the life of a business. Without money, it is difficult to purchase the necessities let alone the niceties. Without money, businesses stagnate and often go bankrupt. According to a report published by Statistics Canada, the lack of internal financial management is a major reason for business failure.

Maintaining a positive cashflow, then, is the goal. We want more money to come in than goes out. While that sounds simple, it does require some focus. Below are some of the basic principles behind maintaining and managing a positive cashflow. We’ll explore each in more detail in subsequent articles.

1. Show me the money! Always, always, always know how much money you have to play with at any given point in time. I am not talking bank balance here! I’m talking about that magical number that happens after you consider what monies you are expecting to come in and what you are expecting to payout.

2. Money In! Ideally the minute you make the sale, you want the money in your hands. So you need to encourage your clients to pay early, or at the very least promptly. Oh! One more little thing… cash those cheques immediately and make deposits frequently!

3. Money out. This doesn’t necessarily involve hanging on to your money like a tight fisted Scrooge. It does mean carefully weighing how and when you parcel out your payments.