Steps for improving cash flow

Steps to improve your cash flow management

The key to cash flow management is managing your cash inflows.  You have direct control over cash going out, but when cash comes in is under someone else’s control.

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From AdvancedAR’s team of small business finding experts comes the following tips for better cash flow management:

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1. Don’t offer terms if you don’t have to.  Ask for payment up front.  Shorten your credit terms. Get accurate information on your customers
2. Credit check your customers before you do business with them.  Businesses who have paid on time, tend to continue to pay on time.  Business that have paid slowly or failed to pay in the past, continue the same pattern.
3. Standardize your quoting process and always put your quotes in writing.  Make sure your written quotes and invoices are clear and include expected delivery and payment dates.
4. Invoice promptly.
5. Quickly cash and apply checks to customer balances.   Automate the process if you can.
6. Send gentle reminders promptly. You can vary the method of reminder, but remind at 30, 45 and 60 days.  Be consistent.
7. Issue monthly statements.  Quality control issues will destroy your cash flow rhythm.  Monthly statements can help you uncover quality issues.  Plus they serve as yet another consistent, gentle  reminder.
8. Keep excellent records.  This includes tracking and fixing quality issues with your products or your invoicing practices.
9. Look at funding sources outside your business.  Can you ask for longer terms from your vendors? Can you get outside funding from a bank or an alternative source?

The time you spend organizing your business around timely collection and receipt of cash always pays off.

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