You often hear about motorists who suffer breakdowns in the worst possible places because they didn’t bother to check their car’s oil level regularly or ignored dashboard warning lights.

Many small business owners do the same thing when it comes to managing their cash flow. Central Maine SCORE chapter mentor Maurice Ouellette warns that, “Businesses can break down when their owners don’t have the resources to pay their bills because of neglected signs or regular checks. That is why good cash flow management is one of the cardinal rules of small business ownership.”

The simple solution is to make sure more cash enters the business than goes out, and that there is always enough on hand to meet obligations, like expenses, payroll and taxes, on time. Ouellette recommends several strategies for cash flow control.

First, ask customers for all or a substantial portion of their payment upfront, or give discounts to those who pay promptly. Even with the merchant fees, credit cards are a great way to bring in cash immediately. It may also be feasible to offer prepaid gift cards, a business-specific cousin of bank debit cards: The customer gives you the money first, then gradually makes purchases until the card is used up or “recharged” with additional cash.

For your outflows, an operating budget is an ideal way to plan and track specific dates for recurring expenses, so that you are not surprised when a bill arrives.

Other tactics for keeping cash in the business include maintaining low inventories, leasing certain kinds of equipment instead of buying outright, recycling and reusing supplies when possible, and encouraging ideas and insights from your employees.

SCORE’s Ouellette emphasizes: “Perhaps the most important cash management tools are awareness and planning. Regularly monitoring your business’ sources and uses of cash will enable you to spot trends and avoid problems. Identifying these patterns will help projecting revenues and expenses months in advance.”

For more information on establishing and operating your small business, contact SCORE, a nonprofit nationwide organization of more than 12,000 volunteer business mentors who provide free confidential counseling and low-cost training workshops. In the Lewiston-Auburn area, call Central Maine SCORE at 782-3708 for information and an appointment; in Rumford-Mexico call 364-3123; in Oxford Hills call 743-0499. Or contact SCORE at www.SCOREMaine.org.

This column is provided by the Central Maine SCORE chapter.