When you start a new business, one of the trickiest problems you'll face is keeping your cash flow balanced. Cash flow is the actual cash available in a company to pay for expenses, salaries, new equipment, and other expenses. It's the balance between your receivables (income from products and services) and payables (operating expenses). If you don't have enough income to cover your expenses, your business won't survive.
A number of things can happen to interrupt cash flow. Poor record keeping can cause costly mistakes and even bankrupt your business. Offering your products and services for too much or too little money can cause financial problems. Slow sales and payments can put you behind in paying your expenses. Equipment failures could result in costly, unexpected expenses. And your inability to get small business credit and loans can keep you from meeting your demands or growing your business.
Here are five ways you can avoid cash crunches that can sink your business.