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Buy more, spend less and keep your cash

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(ARA) - Maintaining a healthy cash flow and keeping a firm handle on expenses is considered sound financial management. For small businesses, however, it can be the difference between succeeding and struggling for survival. Making your money work harder is particularly important in times of economic uncertainty when small businesses are often faced with unpredictable sales and more stringent credit requirements.

Making the most of your purchases
Every business has to invest in goods and services to operate and grow. Small business owners juggling multiple demands, with limited resources, have to be particularly strategic in how they finance their purchases. The good news is a wide range of new solutions are now available to help owners save while they spend. For example, credit cards with cash rewards are becoming increasingly popular with small business owners. By offering the opportunity to earn cash back on purchases from office supply stores, gas stations, computer network companies and restaurants, cards can make expenses less expensive and preserve cash reserves.

"A key driver to small business success is finding ways to make less go a long way," says Steve Strauss, small business expert and columnist. "By offering up to 3 percent cash back on certain purchases, and no cap on the cash back you can earn, cards like Bank of America's Cash Rewards for Business MasterCard credit cards (R) are actually paying you to purchase."

Reward cards are one important tool to help small businesses maximize assets and manage cash flow. Here are some additional suggestions to help you prevent shortfalls and keep your small business in financial order:

Think ahead. Even the smallest businesses can no longer afford to roll the dice with casual "back of the envelope" calculations. Budgeting should be done routinely and systematically on both a short-term (weekly, monthly depending on company size) and a long-term (annual, 3 to 5 years) basis to forecast impending needs.

Don't silo. A company's cash position is tied to business operations, so it is wise to assess production schedules, overtime, supplier choices and delivery dates against cash availability and make adjustments regularly.

Expedite incoming payments. Speed up receivables collection by sending out invoices as soon as orders are shipped and ask customers to make electronic payments wherever possible. Always deposit checks the same day they are received.

Remember that inventory is not cash. The items on your shelves need to be sold to be transformed into cash, therefore you should do everything in your power to move inventory, including offering discounts or installment payments if necessary.

To learn more on smart spending and other small business issues, visit www.bankofamerica.com/learn and smallbusinessonlinecommunity.bankofamerica.com.