Cash is king, as the cliché goes. Join the revolution and help make it more democratic

Cash is used to pay bills, acquire assets, show that the company is liquid and reinvest in the business in order for it to grow.  It is especially important for small businesses to properly manage their cash flow as they are more at risk of failure and competition than larger enterprises.

Gareth Arnold, product manager for Microsoft Office Accounting has come up with the following tips to help small businesses manage their cash flow more effectively.

Predict your cash flow
As a small business, you need to be aware of your cash projections for any business decision. When going into business with any customer, think about how much you are likely to spend and how much you are likely to receive. This is known as "cash flow forecasting". Granted, you are not a soothsayer but a more or less accurate "guesstimation" of your cash movement for upcoming transactions can be the difference between having a healthy financial period or not.

As well as upcoming transactions, small businesses need to keep any eye on their entire income and expenditure for their financial period. This involves keeping your books accurate and reviewing them on a regular basis. The more accurate your books are, the less likely you are to have to pay out for compliance failure.

Bill promptly and ensure your customers pay on time
As soon as you are able, bill your customer. Set yourself an unbreakable deadline by which all transactions and projects are billed. Failure to promptly bill your customers simply means a delay in them paying you.

As well as billing on time, it is imperative to ensure your customers pay the bills on time. Stipulate on your invoice when the bill must be paid and do not be afraid to chase for payment. It is also handy to include your bank's details on the invoice to facilitate quicker payment.

Pay your suppliers
It is incredibly important to pay your suppliers and maintain a good relationship with them. Without supplies, resources and assets, your business can simply not function. As a small business, it is not always possible to pay all your suppliers in a timely fashion. In this event, make sure to pay your crucial suppliers first.

It is a good idea to set up a preferred suppliers list for those requiring swift payment. It is imperative to pay those suppliers on whom you depend on for the supplies you simply cannot live without. For the rest, simply ask if you can make a partial payment and pay the rest later. Obviously, having a good relationship with the supplier will help facilitate this. Suppliers will also often give businesses a discount for prompt payment.

Choose the best account
Banks are great! When you think about it simply, it's just an institution where you can put your money and earn interest. We have certainly come a long way from keeping our money in a safe behind a painting on the wall.

Take advantage of this: choose the best bank and the best account for your business. When choosing a bank, don't just choose the one with which you have a personal account. Most banks offer very good incentives for small businesses, so shop around and find the best one for your business. When choosing an account, bear in mind bank charges, telephone and online banking facilities and loan requirements. Look for accounts that offer benefits like card misuse insurance and fraud insurance.

Be aware of industry trends
Make sure you are aware of the trends happening in the economy as a whole because ultimately, this will end up affecting your business directly or indirectly. Is there a recession? Have interest rates changed? Is there an increase in unemployment? What are the predictions for the credit market? These are the kind of issues that you need to be aware of because they do affect prices and cost, which will invariably affect your cash flow.

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