If your not doing this, you don’t need a line of credit, you need a loan. 3. Are you current with your suppliers? Your payables should tell you something about the financial health of your company. If you’re not paying off suppliers every month, you are either not handling your cash flow properly or your pricing is not in line. Whichever it is, fix it. 4. Do you pay cash for your trucks? Equipment replacement costs are the second greatest expense you have in your company. If you don’t plan for it, you end up having to take out loans. I was taught at an early age, there are two ways to buy something. You can buy it and then pay for it, or you can pay for it and then buy it. One will just cost you a lot more. Many consider payments on trucks a necessary evil. If this is you, you have bought into a great myth. Even in today’s economy, contractors are paying cash for trucks. They are just planning ahead. 5. Are you current with your taxes? If there is one thing you never want to fall behind on it’s taxes. Make sure your quarterlies and
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estimates are paid on time. The interest and penalties charged by your state and the IRS are huge and will suck the life out of your company. The worst part is, they really don’t have to negotiate with you. They just come and take stuff. 6. Do you have real cash left over at the end of the year? Not money on paper. Not your P&L showing you that you made money last year but real cash left over in your bank account even after you have accomplished the items above. There are real differences between accounting and cash flow. You can’t run your business from your P&L. You have to run it based on the money coming into and out of your check book There is nothing wrong with not knowing what one of these dashboard lights is telling you. I don’t always know what every one of the lights are that come on on my car’s dashboard but I know where to go to find out. There is nothing wrong with not knowing how to accomplish these things. Not doing something about not knowing is a problem.
eClean Magazine