By George DeMare, Vice President Business Development —

Managing cash flow during a slow season can help ensure a successful year for your business.

If your profession is seasonal, like landscaping, home remodeling, or construction, work tends to slow down in the winter months. Year-end cash flow planning is vital to keeping a business in shape.

The goal is to maintain positive cash flow throughout the entire year, but especially during the less active months so you can meet all financial obligations.

Getting a grip on revenue starts with cash flow statements that track money coming into your business such as customer payments and interest and those going out of your business such as payroll, payables, and materials. The cash flow equation is simple – if you have more money going out than coming in, your cash flow is negative.

The next step is to develop a cash flow forecast for the next 12 months. This can be done by reviewing statements from the previous year and comparing them to your sales forecast for the next year. Use this forecast to look for any potential problems like huge loan payments or the cost of materials.

While planning for the next year, figure out how to reduce expenses and accelerate income so there is more of a cushion during stagnant revenue months. Look over monthly expenses and see what can eliminated. Be sure to follow-up with clients as soon as payment is due and pursue any outstanding invoices. Expand your services or client base to bring in more income and figure out ways to generate cash quickly from customers. Think about offering off-season discounts.

Monitor cash flow closely by reviewing statements weekly or even more frequently especially as the slow season approaches. The sooner a possible cash shortage is spotted, the sooner you can deal with it.

Develop a backup plan to add cash if necessary and remember the best time to apply for business financing is before you need it.

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