LANGLEY, BRITISH COLUMBIA--(Marketwire - Oct. 30, 2012) - Effectively managing cash flow and knowing when and how to approach lenders for credit are two key factors in every small business' success. This is especially important given that over 30 per cent of all business start ups do not make it past the second year.

Keeping your eye on the "cash"

"One of the key concepts to keep in mind as a small business owner is that your own cash is your cheapest form of financing," says Norman Attridge, assistant vice-president of small business banking at Envision Financial. "First, every business owner should prepare a cash flow forecast so they understand their cash needs. They then need to maintain good discipline and management to maximize its availability. By properly managing cash flow, not only is it more inexpensive in the long run, but it also reduces the need to supplement internal cash with credit."

Attridge advises that business owners should look to certain areas within the company to provide this cash. "Inventory sitting on shelves for long periods of time is a big use of cash. Price it to move it. Use credit rating services to help determine credit limits for customers through accounts receivables but remember to monitor their accounts frequently and manage them within these limits. Business owners should also entice their customers to pay off accounts early. They should also work with their own suppliers to have more favourable terms of credit extended to them."

However, as businesses flourish, many entrepreneurs need to access additional capital in order to grow their business. Here are Attridge's suggestions on how business owners should prepare and what they should expect when seeking credit from their financial institutions:

Knowing the right time to access credit

"Every business goes through good times and bad, and the best time to approach any financial institution for credit is during those good times when business is going well," shares Attridge. "Even when you don't necessarily need credit at the moment it's always advisable to ask, within reason, for it when your business is on the upswing."

There's no such thing as being over prepared

"When approaching any financial institution for credit, entrepreneurs need to make sure they are well-prepared for that meeting," says Attridge. "They need to demonstrate that they are well-researched, knowledgeable and confident in their business. They should also know why and how much credit they need and how they are going to pay it back. Once a banker loses confidence in you, it is very difficult to get that trust back. Always keep your business plan current and review that along with your recent financial information with your banker."

Communicate, communicate, communicate

Stressing the importance of maintaining clear and solid lines of communication with lenders, Attridge says that entrepreneurs should really think of their banker as one of their stakeholders and keep them informed of any changes to the business. Particularly if the business is going through a rough patch, business owners should be the first to tell their bankers so that they can work together to come up with a collaborative solution that works for both parties. Don't run the risk of having your banker find this out through a third party or raise concerns by not returning calls.

Attridge offers one last piece of advice to business owners, "You are the entrepreneur and you have access to all the information on what your company is doing and where it's going. Fundamental to good management is a solid understanding of your financial situation. You don't have to be an accountant but you should understand concepts like basic banking ratios and debt and equity - it will help you to react more quickly to situations that impact the health of your company."

About Envision Financial

Envision Financial is a division of First West Credit Union, B.C.'s third-largest credit union with 37 branches and 29 insurance offices throughout the Lower Mainland, Fraser Valley, Kitimat and Okanagan, Similkameen and Thompson regions. Led by Launi Skinner, First West has approximately $6.2 billion in assets under administration, 167,000 members and more than 1,300 employees. For eight years running, Envision was named one of the 50 Best Employers in Canada. Envision is designated a Caring Company by Imagine Canada.