Small Business Cash Flow Management Tips to keep you Business on Track

Keeping Your Cash Flow on Track

“Cash is king” is a popular phrase. However, for a small business, cash is a royal problem because of the delay in collecting it from your customers. While you wait to get paid, your expenses can’t wait. Here are some tips to help you manage your cash flow.

Know What Your Cash Flow is

Prepare cash flow projections on a monthly, quarterly or yearly basis. You need to look at your customers’ payment histories, your vendors’ patience, and identify your upcoming expenditures.

Managing Your Receivables

In an ideal business world, you would get paid for a sale the instant you made it, and you would never have a cash flow problem. Unfortunately, for manufacturing businesses, this doesn’t happen. However, you can improve the status of your receivables. Here are some suggestions.

• Give customers discounts for paying their bills rapidly.

• Ask for deposit payments when you receive orders.

• Carry out credit checks on new noncash customers.

• Issue invoices immediately upon shipment of orders.

• Follow-up if payments are slow.

• Avoid slow-paying customers. Or, institute a policy of cash on delivery.

• Sell off old, outdated inventory at reduced prices.

Managing Your Payables

Don’t be complacent when your sales are expanding. You still need to carefully watch your expenses. Here are some ways to use your cash wisely.

• If supplier payments are due in thirty days, don’t pay them in fifteen.

• Try to get extended terms (equal to low-cost loans) from suppliers.

• Transfer payments electronically on the last due date.

• Be on friendly terms with your suppliers – if you ever need to delay payment, you’ll have their trust and understanding.

• Carefully inspect offers of discounts for early payments. You need to weigh whether it’s worth reducing your costs against making expensive loans to your suppliers.

• Don’t always choose the lowest price for supplies. Sometimes more flexible payment terms are better.

Surviving Shortfalls

However diligent you are, sooner or later you will probably find yourself in a cash flow crunch. Talk to Artemis Commercial Capital to find out how we can solve your cash flow problems.

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