Doron F. Eghbali Business Planning Law Blog on Lawyers.com

How to Manage Cash Flow in a Down Economy

Sunday, January 17, 2010 by Doron F. Eghbali

Given the tight credit market and the uncertainty as to direction of the economy, this is extremely important to have cash in hand and save money. In fact, managing cash flow requires discipline and foresight. Let us review some fundamental strategies to weather the "Great Recession".

MAKE FINANCIAL PROJECTION FOR THE YEAR

Project your costs and anticipated revenues.
Project when you will likely have cash.
Project when you will likely need cash.
Project if you could maintain a cash reserve. This could be a life saver.

MAKE CONTINGENCY PLANS

Know what you will do if your well educated financial projection is off.
Prepare the best case and worst case scenarios.

SAVE AND NOT SPEND

Do not spend on lavish offices and furniture.
Get the best value on every transaction.
Do not buy what you think might be of value a year from now.
Buy to the extent you need for the next six months or so.
Lease and do not buy, although buying will benefit you in the long term.
Lease office furniture, computers and copiers.
Do not pay yourself a huge salary without revenues to justify such payments.

KEEP YOUR EMPLOYEES HAPPY AND INFORMED

Offer incentives to your current employees to keep them happy, boost their morale and increase their efficiency.
Remember to treat your employees with respect and dignity they deserve.
Do not burn out your employees.
Explain to the extent possible the financial situation of your business to your employees.

MAKE SURE YOU GET PAID

Offer incentives to customers or clients to pay you.
Associate penalties with late payments.
Devise collection techniques for customers or clients who do not pay.
Make sure you get paid, always.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. He Could Be Reached at 310-651-3065 or doroneghbali@LawAdvocateGroup.com. For More Information, Please, Visit: www.LawAdvocateGroup.com.

Posted at 13:26 PM

Topic: Business Planning