Cash flow can make or break a business, but many small business owners do not do everything in their power to maximise it, and the result is loss of opportunity and stress for the company and the owner. On the other hand, there are some simple steps that can be taken to drastically improve business cash flow, which will also improve business management, i.e. use globalisation and how it can be used effectively to help the corporate cash flow. Here are some tips to improve your business cash flow:
Develop good terms and conditions:
Having good conditions is not only a good business practice for large businesses. It is a very good practice for small business owners to make sure that their clients know when (and how) they expect to pay. Be sure to include items related to late payment and interest, and that debt collection costs will be transferred to the customer. I had many customers who thought they could transfer the fees to the debt collection agency only to see that they had to absorb these costs themselves because they did not recognize their customers.
Perform credit checks on potential customers or customers who do not pay in cash.
Many small businesses deal with any business they can acquire and make credit checks only when problems arise. It is often too late to check for problems. It may be better for your company in the long term to reject the customer immediately if he or she has a bad credit record, free payment or fixed arrears. Fee payers are often troublesome customers. These are usually backward, and it is usually impossible to satisfy and find any reason or justification for choosing errors in the company, and draining resources as they do.
If you are a small company that is just starting, it is very important that payments for sales are made at a regular rate. There are cases when payments are so heavily supported that the company is very close to bankruptcy. Cash flows from the company occur at a normal rate because the services provided to produce goods cannot be stopped. So outgoing money and no money cannot lead to serious problems. In cases like these, there is another real option that companies can use. This option is called Factoring Finance. Factoring companies usually buy pending invoices from these companies at a reduced price and charge the full fee from customers at a later date. It helps both the company and companies. From the company’s point of view there is no need to sell the product, just buy an invoice at a lower price and get the full amount. The difference leads to profit.
Forecast your business’s cash flow:
Many businesses spend a lot of time planning, budgeting, analyzing sales, overhead, profit and loss, and balance sheets, but they can forget cash flow. Get a good accountant. At a minimum, make a monthly plan and if it seems you can be a little tight, set up weekly or even daily forecasts. Develop a business plan for your money – if you look at how you can pass some payments, or talk to a factoring company to see how they can help.