Cashflow is the lifeblood of small business.
Careful cashflow management is essential to avoid financial trouble. A lack of cash can be hard to remedy, especially if the business needs to purchase supplies to make further sales. Without additional investment or a bank overdraft to help out the business, it will often lead to disaster.
There are a number of things you can do to avoid this. Try to make it as easy as possible to receive payment from customers quickly. You can do this by offering small incentives for swift payment.
You should do the opposite when it comes to paying company bills. Take advantage of extended due dates and use that time to set aside enough money With careful cashflow management you can make far more efficient use of your money.
Remember that your inventory is not cash until is actually sold. You may save a few pennies by ordering items in large quantities, but if it cannot all be sold then it is essentially just dead weight for your business that you may end up selling at a discount.