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Canadian Money (James McQuillan/Getty Images/iStockphoto)
Canadian Money (James McQuillan/Getty Images/iStockphoto)

Small Business Briefing

Cash flow king for small business owners Add to ...

The latest news and information for entrepreneurs from across the web universe, brought to you by the Report on Small Business team. Follow us on Twitter @GlobeSmallBiz. Download our app here.

Seventy-six per cent of small business owners believe effective cash-flow management is fundamental to the success of their businesses, with 72 per cent reporting that they currently manage cash flow well, a study released today from the American Express Small Business Monitor reveals.

This claim is especially interesting, the AMEX report suggests, because the same survey also shows that 50 per cent of small business owners experienced cash-flow problems last year. As such, 82 per cent report that they’ve taken specific steps to better understand their cash flow, with more than half saying their management teams evaluate cash flow at least bi-weekly and 11 per cent evaluate it daily. Another 35 per cent monitor cash flow monthly.

The accounts receivable department is the specific cash-flow area where small business owners struggle the most (49 per cent), with it taking an average of 40.2 days to collect. But many small business owners have shown a willingness to improve accounts receivables by increasing lines of credit (15 per cent), collecting on overdue receivables (13 per cent) or negotiating with clients, suppliers or creditors (10 per cent).

With regard to improving their overall cash flow process, small businesses are implementing a number of techniques, including: accepting electronic payments (49 per cent); requiring deposits or staged payments (38 per cent); using a line of credit or a debt vehicle (33 per cent); delaying payment of some accounts payable (30%); and improving inventory management (29 per cent).

Managing cash flow can be the single most challenging aspect of managing a small business, writes guest contributor Shawn Casemore, particularly in times of steadily increasing costs. To make matters worse, many small business owners believe “it costs what it costs,” which is simply erroneous. Here are 10 tips for small businesses to reduce operating costs and increase cash flow.







Start-up lets you party like a celebrity

Want to live like a celebrity? Well, now you can. California start-up Eventup.com has secured listings to a number of celebrity homes for renters to host parties and events, The New York Daily News reports.

According to its website, the company's mission is to give consumers hassle-free and relatively affordable access to unique spaces that previously would take tons of time or were impossible to find.

“On most real estate or house sites you can only look,” says CEO Tony Adam, former head of online marketing for MySpace. "For not much money in some cases, you can grab some friends and throw an event at these spaces.”

With properties primarily in New York, Los Angeles, and San Francisco, the company allows renters to party where HBO’s Entourage was filmed, in Bob Dylan’s house, or in Lady Gaga’s pre-fame East Village walk-up.

Small business confidence slides in the U.S.

After six months of steady gains, U.S. small business confidence dropped in March, according to the National Federation of Independent Business (NFIB) optimism index.

The survey was the latest to imply growth last quarter decelerated from the fourth quarter's 3-per-cent annual pace, Reuters reports.

Job creation slowed in March, with employers adding just 120,00 positions to their payrolls - less than half the average monthly increase in the prior three months. Owners were also pessimistic about sales, profits and their chances of accessing credit, the survey found.

"It looks like a replay of 2011, a few months look good early on and then it all fades," said William Dunkelberg, NFIB chief economist.

Mr. Dunkelberg also said the rising price of gasoline is making owners more pessimistic

“More people are complaining about inflation, which usually means energy prices,” he said.

EVENTS AND KEY DATES

Innovation Uncensored

Fast Company's Innovation Uncensored event is taking place on April 18 in New York. The day's content is geared toward anyone who thinks of themselves as an innovative business leader including but not limited to the fields of technology, design, marketing, entertainment, venture capitalism, energy, infrastructure, non-profits and brand executives. To register, click here.

EDITOR'S PICKS FROM REPORT ON SMALL BUSINESS

Smart ways to use credit cards to finance your business

With some clever strategies, cards can extend your cash flow and pay dividends at the same time

FROM THE ROSB ARCHIVES

Video: Fans melt for Gorilla Cheese food truck

This Hamilton-based food truck has achieved celebrity status for its inventive grilled cheese sandwiches

Got a tip on news, events or other timely information related to the small-business community? E-mail us at smallbusiness@globeandmail.com

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