A recent study made on 500 small businesses revealed that 55% of them identified cash flow was a major stress in their business. Managing cash flow is a real challenge for Canadian entrepreneurs.Here are 3 tips to manage your money in a more effective way.

1.  Receivable

The speed at which your customers pay your bills and how you manage your unpaid accounts is one of the determining factors in the strength of your cash flow. Sometimes it is tempting to extend the payments of accounts receivable for your client in order to show your appreciation. However, if this causes a problem in your cash flow and you need to fund these unpaid bills, it may be a good idea to review your policy payment. Normally, accounts payable are settled within 30 days or less.

2. Payable

Your cash flow is also affected by the payment of your bills when you settle the amount due to your suppliers. If you are struggling with your cash flow, have a talk with some of your suppliers and try to negotiate a payment solution spread over a longer period of time. Having a delay of payment of 45 days instead of 30 days may allow you more flexibilities and can allow you to pay your suppliers in order of priority. However, it is important to keep a good relationship with its suppliers because they are one of the reasons that make your business to be still active.

3. The inventory

An inventory of your products can be a big chunk of your cash flow, especially when the turnover rate is low. It is like frozen money waiting to be thawed. With an effective accounting system, you can manage your inventory efficiently without losing money too important for your capacity.

Considering these three elements and establishing a strategy for your cash flow, you can ensure that you have less stress and have more latitude to manage your many projects.

Pierre-Luc Paquin is a Sage Certified Consultant Platinum level, Sage Certified Trainer, Sage Development Partner Silver level and founder of LG4 Logiciel Comptable – a consulting firm specializing in implementing accounting software. Pierre-Luc has a bachelor degree in economy and finance and more than 8 years experience in sales, financial consulting, software imp