A cheesy pun on life insurance that may just save your business.

There's an old time pun that asks, when is the best time to buy life insurance? The answer being, the minute before you know you're going to need it. While this old pun isn't all that funny, the premise is highly relevant to owning a small business. Life insurance to a person, is cash flow to a business. No life insurance? No protection. No cash flow? Well, you can guess the ending there too...

We speak with small business owners every single day who are in desperate need of a loan to cover emergency situations. The reality is, at any given moment a pipe could burst, a machine can break, an opportunity for expansion may present itself, or an offer to buy a large quantity of inventory at a deep discount may pop up. Bottom line, we don't know what the future may bring; so it's best to be prepared.

Did you know - With a small business line of credit, you can borrow up to $100,000 and pay interest only on the money borrowed. You then draw and repay funds as you wish, as long as you don’t exceed your credit limit. Need to manage cash flow? Buy inventory? Pay for a surprise expense? Then a business line of credit makes sense. After-all, who wouldn't want a cushion of cash on hand for a rainy day? Click here to learn more.

Cash flow doesn't have to be complicated. Indeed, most cash flow problems have common causes. The following are the three factors that are most often at the root of cash flow problems:

1. Not Paying Attention to Expenses - Many businesses end up in a cash flow crunch due to unexpected expenses (for example, costly repairs to equipment, replacing malfunctioning technology or a natural disaster) or too much money going out each month (such as ongoing expenses that have quietly crept up to an unsustainable level). Resolving a cash flow crisis requires that business leadership take a renewed, vigorous look at their ongoing cost structure. Every business owner should have a rigorous process in place to track expenses on a monthly basis and project future expenses for the months ahead.

2. Uncertainty About Future Cash Flow - Some businesses are so caught up in the day-to-day grind of getting work done and paying bills that they don’t take time to anticipate what's coming in the next few months. Maintaining healthy cash flow requires a long-term vision.

3. Slow-Paying Customers - Many cash flow problems are caused by a delay in receivables, such as when a company’s customers or clients are slow in paying their bills. Did you know small businesses have $825 billion in unpaid invoices? Far too many companies allow their customers to become delinquent in paying them, often without fully realizing the problem until it is having a major impact on their cash flow. Business owners need to put consistent policies and procedures in place to ensure that customers pay in a timely fashion. It's especially important to clarify your payment terms and expectations on every invoice, whether that’s “payment due within 30 days” or “payment due upon receipt.” Don’t assume that your customers automatically know what to expect be clear about when you expect to be paid for your products or services.

More than anything, small businesses must be prepared to fuel their business with operating cash flow at all times. By planning at least the worst, average, and best case scenarios for the near future, small business owners can minimize damage from external influences, while maximizing opportunities during an upward momentum.  All of these can be best achieved through an efficient and stable cash flow, often supplemented by obtaining small business capital. Be proactive, plan ahead, and create a relationship with a reputable funding source now, not in an emergency situation when you're forced to accept anything that's thrown at you. As always, we're here to help!