Cash Flow Is Important Of your Business

The phrase "Cash is King" has never been more true in business than it is today. Unfortunately, while many companies are finding themselves short on cash, lending requirements have become extremely stringent. Moreover, increasing sales do not always equal increased cash flow, especially if the sales are credit sales.

Managing your cash flow effectively requires close attention, just like managing the rest of your business. The good news is that a little attention can go a long way towards increasing the cash balance at the bank. As with all good things, a little work is required so let's look at how you can improve some of your operating processes to increase cash flow.

Here are a few tips that can have an almost immediate impact on your cash flow and cash position.

1. Set a price and term policy, then stick to it.

Make sure all employees understand the importance of discussing pricing and payment terms during the sales process. When Customers delay payments, they are using your cash and costing you money. Basically, you are financing their business. Be diligent about setting payment expectations right from the start with your customers.

2. Offer payment options.

Do you only accept cheque? Offer other options such as electronic transfer, wire payment, or credit card. Make it easier for customers to pay you.

3. Customer Deposits.

If you are offering aggressive pricing or giving concessions, do not be afraid to ask for something in return. This is a great time to ask your customer to pay a deposit at the time of order, or prior to starting a job. This helps cover your up-front costs, and the risk associated with non-payment is decreased when your customers has some investment in the transaction.

4. Send out invoices in a timely manner and follow up promptly

The quicker you send out the invoice, the sooner the clock starts ticking for a customer to pay. Send out invoices, and follow up immediately with courtesy call is not a collection call, but a call just to check with the customer to make sure the invoice has been received.

Remember, cash flow is the life blood of your business. Making changes to your operating processes to promote positive cash flow is a way to keep your business healthy, vibrant, and able to meet its obligations.

Source: 1Klassifieds Team.