Cash Flow Management

$traight Talk — By on February 7, 2013 at 8:00 am

A healthy cash flow is essential to the growth of your small business, but can sometimes be hard to manage.

Dealing with slow-paying customers can create stress when it comes to paying your bills on time; establishing a healthy cash flow can alleviate that. Here are a few tips to keep your cash flowing.

Deanna Barzak

1. Know your expenses and add value. While it may be tempting to discount your goods or services to attract consumers, selling your product at a loss is never a good idea. Instead, think of ways to add value to your goods or services, such as bundling your products.

2. Strive for repeat business. Loyalty or VIP programs are a great way to establish repeat business, which is crucial to retaining a steady cash flow.

3. Look to alternative financing. One quick fix to establish a healthier cash flow is to open a business loan or a line of credit.

  • • A business loan is typically used for an asset purchase, such as a piece of equipment or company vehicle. This purchase is normally one that is reflected on the businesses balance sheet as a depreciable asset.
  • The loan is paid for on a fixed monthly basis with both principal and interest going towns the loan amount. The terms of the loan can range from one to seven years, depending on the life of the asset.
  • Bottom line on a loan: it should always be used for some type of asset that will go on your balance sheet.
  • A business line of credit is a financial instrument typically used for an organization’s short-term working capital needs, such as inventory purchases, future project costs, or company payroll. Lines of credit are to help even out your cash flow.
  • Terms are usually annual with an interest rate based on the Prime rate plus one to three percent.  Payments are interest-only on the amount you borrow.
  • Typically, banks prefer to see that the Line has been “rested” or paid down to a zero dollar balance at some point during the year. Lines of credit range from $10,000 to as high as $500,000, depending on your business needs.

Telhio Credit Union has both business loans and lines of credit available to small business owners. For more information about these alternative financing options, contact a Telhio business lender representative at 614-221-3233, option 6.

For more information about Telhio Credit Union, visit Telhio.org or call 614-221-3233.

Telhio Credit Union is a full-service financial institution open to everyone who lives, works, worships, or attends school within Franklin County and surrounding communities. Founded in 1934, originally as the credit union for the Columbus Telephone Company, Telhio is a not-for-profit financial cooperative where its members are also its owners. Driven by its philosophy that members come first, Telhio is committed to the highest standards of responsibility and conduct. Telhio offers a variety of innovative programs, services and products to support its members’ financial needs. Telhio offers seven branch offices throughout Central Ohio and nearly 4,000 shared branching locations nationwide. Additionally, Telhio credit union participates in the highest level of combined federal and private share savings insurance available, insuring deposit accounts up to $500,000.*

*Federally insured by NCUA. Additional coverage up to $250,000 provided by Excess Share Insurance Corporation, a licensed insurance company.

Deanna Barzak (25 Articles)

Deanna L. Barzak is the Business Services Relationship Manager for Telhio Credit Union. She is responsible for serving Telhios business members. Deanna previously served as a business banking specialist at a major local banking institution. Prior to that she held various member and business service roles at Navy Federal Credit Union and the Congressional Federal Credit Union in Virginia. Deanna has a bachelor's degree from Radford University. She currently resides in Columbus, and is a volunteer with Rebuild Together and the Columbus Young Professionals Club.