7 Tips to Improving Your Cash Flow

Cash is king...that's what everyone tells us and it's true! No business can be successful without proper cash flow. If this principle of money is well known, why are so many companies suffering? It is always evident when there is good reason to manage the day-to-day aspects of business. not necessarily.

Here are7 Tips to Improving Your Cash Flow

1. Cash and Pregnancy. Instead of worrying about accounts receivable, run your cash business and carry over. The best business plans are those where customers pay at the time of purchase. 

So you don't have to worry about billing and collection procedures. Billing and collection takes precious time, so you need to come up with creative ways to encourage immediate payment. Set ground rules first so your customers know what to expect.

2. Collection of Accounts Receivable. Please collect the dues quickly. Don't let customers stay there forever until they want to pay. Being a good agent for your business is "good business", so you need to have a billing and collections process in place. 

The longer you wait to pay your dues, the less likely you are to collect dues. You don't have to be rude and crude to collect instant money from your customers. As a rule of thumb, you should always include a due date on your invoice and send a follow-up statement within 10-30 days of the due date. 

Different industries and work environments have different visions of the "ideal" time. We do not send follow-up communications more than 10 days before the due date.Payments can only be delayed by mail.

However, waiting more than 30 days is a very long time. If payment is not received within 45 to 60 days of the payment due date, a follow-up call must be made to the customer. 

Accounts with a maturity of 90 days or more should be moved to the next level group with an external institution, an internal "ninja" group, or other status created for the group. 

Find what works best for your business and stick to it. Each time we receive a payment late, we incur additional costs to do business. Time is precious.

3. Accounts Receivable Financing. Implementing an accounts receivable financing program. Accounts receivable analysis is very popular and a great way to maintain cash flow. Companies that do business with large corporations or government agencies can benefit from factoring programs. 

Setting up an accounts receivable financing program can be more challenging if your clients consist of small businesses or individuals. why? Financial companies monitor risks. Less risk for large companies and government agencies. Or so they think!

4. Seller. Negotiate terms with vendors to slow the flow of cash payments. Many sellers have payment terms that allow payment to be delayed until the end of the month or 60 days. 

This allows you to use their money to stay afloat while working on your project. Next, you want to receive payment from your customers before they are required to pay for the purchased products. Some companies go by sea. 

You are selling someone else's goods and your money is not included in the inventory. 

This option allows you to increase your product offering without investing in large amounts of inventory.

5. Customer Deposit. Ask your client to pay a security deposit before starting work. This will help cover the initial cost of starting the project. 

It is common to receive a deposit when signing a contract. I received a portion upfront, which reduces the risk associated with not paying. 

You can also make periodic payments throughout the contract in exchange for a one-time payment upon project completion, so cash flow is always maintained.

6. Revolving lines of credit. Create a revolving line of credit through your lender to help with potential cash flow crunches. 

Especially if the immediate payment discount savings are greater than the lender's financing fees, or if the lender's financing fees are lower than what the seller charges for late payments. help. 

This allows you to keep working during hours when you may not have extra cash, even if they offer great specials if you buy today.

7. Provident Fund. Create a provident fund to help you work late hours. Most businesses face volatility in business flows, and managing cash effectively can be a challenge. Stock up on more supplies during the good times to alleviate the problem of the slow season. 

I know this sounds easier than it actually is, but if I were to turn a monthly percentage into a savings account, it would be "invisible and out of my mind."