Cash flow problems are responsible for causing over 70% of businesses to fail within their first year.
How can you ensure that your business develops and maintains a healthy cash flow? You have to be aware of the dangers that can pose a serious threat of causing such problems.
One risk of cash-crunch is due to mix-ups between business and personal bank accounts and credit cards. Cash flow problems often go undetected until it is too late because of the confusion. This situation is very common among start-ups since initial financing often comes from the owner’s personal savings.
One simple solution is to open a separate bank account and credit card for business. Opening separate account is not good enough yet. The most important is that you have to develop the habit of using the separate account and credit card exclusively for business.
The business bank account should be where you deposit customer payments, draw your salary, pay supplier, employee, and taxes. Use a separate credit card exclusively for business-related purchases. Pay that credit card from business bank account.
