Business budgeting is not a one time occurrence; owners need to be sure their finance teams are constantly going over their accounts payable and receivable to find ways where they can save money. Maximizing cash flow is the idea behind any business budget, but in an unstable economy, it can be difficult. This illustrates the importance for business owners to create processes where financial forecasting and working to maintain cash flow are operations that are constantly revisited. This also is a smart practice for business owners that want to have an idea of how much working capital they have at their disposal. Here are a list of tips business owners can use to keep cash flow high.

Fixed expenses don't have to stay the same

Too many business owners write off their fixed expenses without even thinking about how they can be reduced, but it is possible. To maximize savings, business owners can look for less expensive insurance policies that offer the same benefits, or office space that may provide similar benefits but for half the price. Speaking with property managers to lower rent payments can also give business owners more money for variable costs.

“It’s not necessarily the big hole that’ll sink a ship; that one you can plug," Al Titone, the district director of the New Jersey Small Business Administration, told Inc. Magazine. "It’s the hundred little pin holes that are hard to find."

Variable costs can also be reduced

There are always cutbacks that business owners can make, they just need to look at all of the costs that are associated with running their business. Every four to six months, business owners can look at things such as office supplies, shipping charges, costs of goods and bonuses for employees to make sure they are using their money most efficiently.  

“You should always be second-guessing expenses, even in a good economy,” Titone told the magazine. “If you’re doing OK right now, it’s a good time to lock in cash flow.”

Regularly evaluate income and expenses for tax reasons

One of the most annoying things for business owners is having to pay more come tax time because of errors made when filing. To make sure this doesn't happen, business owners should be sure their firm performs a monthly analysis of income and expenses to look back at when doing the taxes. Business owners need to keep the books on a cash basis, as well as an accrual basis to see exactly what is taxable income.

“That’s part of this whole cash flow planning process,” John Welch, an attorney who specializes in small businesses, told the magazine. "That way they’re not surprised by a big tax bill."

Know the capital needed to keep the business afloat

Businesses cannot continue their operations if they fail to have the money for the base cost to run the business. In order to make sure they have these funds, the budgeting process should include a break-even analysis. Many business owners overlook this process, and just assume they will have the necessary cash flow to keep the business in service.

“In an uncertain revenue world, the idea is to keep fixed cost to the minimum to run the business, and then really manage variable costs,” Welch told the magazine.

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