When you operate a business, in particularly, a small business, cash is King! In general, if you're out of cash, you are out of business!  This is why properly managing the cash flow in a business is critical to its success.

In it simplest terms, cash flow management means receiving payments from your customers as quickly as possible and delaying payments to vendors for as long as possible.  However, managing your cash flow is not always that simple and can require additional time and effort to stay on top of it.

Is it possible for a business to be highly profitable, but run out of cash? Yes! Imagine you get paid for your sales at the time of purchase such as a retail or grocery store does.  You would rarely have a cash flow problem unless you are managing your inventory poorly. However, for those businesses who do not get paid at the time of purchase, it is very important to manage your accounts receivable and accounts payables properly.  Businesses who give there customers time to pay for there products or services can run into serious cash flow problems if the customers do not pay as agreed.

Here are a few ways to improve your business' overall cash flow:

• Establish good credit policies for new customers and enforce them.
• Require deposits from customers at the time of order or before shipment.
• Offer discounts to customers if they pay sooner.
• Process orders quickly and issue invoices immediately.
• Establish procedures to follow-up on slow paying customers.
• Hire a collection agency or an attorney if needed.
• Reduce cash tied up in slow moving or obsolete inventory...

To continue reading this article you need to be a registered user of our website. If you are already a registerd user login now. Don't wait, your FREE registration is one click away.

Username:  Password:   Remember me.    [Forgot Password?]

No comments posted on this article.

Comments on this article have been closed