If you are like most people, you may be starting off the new year by setting resolutions for yourself. And, if you are like most people, we have a feeling "tax organization" is not on that list. It may not sound exciting, but getting more organized will definitely pay off. Although it may be too late to reap the benefits this tax season, January is the perfect time to implement some of these simple tips to help you get organized and stay organized year-round.

As we begin a new year, this is as good a time to evaluate how your business can begin improving its cash flows.   In order to do so, a business owner must understand the operating cycle of their business (i.e. time it takes to collect receivables, to turn (sell) its inventory, and pay off its creditors). By gaining an understanding of this cycle, a business owner can identify areas where they can make changes. Here are some suggestions to improve your business's cash flows:

1. Bill promptly. Many times, business owners find themselves busy creating new business and making deadlines that they don't get around to billing on a regular basis. If you don't already have a system in place, start (or assign an employee to start) billing for projects on a regular basis. When taking on long-term projects or clients, consider obtaining a down payment or negotiate in advance for regular payments instead of allowing the amount due to build up until completion of a contract.
2. Avoid slow pay/no pay customers from the start. Before entering into a significant client relationship or contract, assess your potential exposure. Request credit references and learn from other businesses experiences. One could also request a credit report from the various credit reporting agencies such as Dun and Bradstreet.
3. Create incentives for faster payment to you. Small businesses can sometimes significantly cut the time spent waiting for payment by offering a discount for quick payment. I have received bills from businesses offering a small discount for payment within 10 days. If I was going to pay the bill within 30 days anyway, I'm likely to fire out a check right away to get that little extra discount. Good for my business's bottom-line, good for the business's cash flow, too.
4. Control your inventory. A business owner should periodically review slow turning items and determine whether they should continue to be carried. Sometimes reducing inventory can be pretty simple. I have seen restaurateurs cut back on the size of their wine cellars, focusing on quality wines from a few regions instead of trying to be all things to all diners. If the customer still has good choices, it may not even matter that he has fewer choices than before.
5. Finance capital expenditures. Many times business owners will use cash flows from operations for acquiring long-term assets such as vehicles or equipment. By financing the acquisition, the business will retain cash flow and the payments on loans will be spread out over the years in which the asset will be used.
6. Monitor forecasts of sales and expenses. First of all, if you do not forecast or budget your business's yearly activity, you need to begin doing so. Once the forecast is established, regularly monitor it. Therefore, if you identify that sales are going to be stagnant or down, you can identify what variable costs can be adjusted so that your bottom line does not decline.

By taking these steps, you will help your business become more competitive and help you put more money in your pocket.