For Entrepreneurs, Running out of money after a launch is one of the primary reasons why most Start-ups fail. Here are some tips to keep cash flowing for small and medium-sized businesses. The business appears short due to late payers, debtors, and defaulters.
Familiarize yourself with the basic money management principles and activities to make a sense of account receivable and payable management. This continues to make life difficult for entrepreneurs. Take steps to ensure your healthy business with the most dedicated and sophisticated support that leads to them.
1. Worth of Sound Credit Practices – While dealing with new customers, it is always important to follow sound credit practices. The worth of the credit of your new clients conducts for the helpful trade reference and a bank reference. Credit reports, available from Dun and Bradstreet and others, report on a company’s general financial health as well as how quickly or slowly it pays its bills.
2. Payments deposit Promptly – Sooner you make deposits, sooner you can put the money to work for your business. A healthy business sign is always an option for optimum working capital available. This makes fund available for daily expenses and speed up your business cash flow.
3. Proper Inventory management Efficiently – Maintain proper cash flow with the essentials of inventory management. Less cash tied up in inventory would invariably result in better cash flow. Also, make sure to order for additional inventory when current inventory level is down to bare minimum.
4. Prompt invoice response – Make sure to invoice your customers without any delay. You will be paid faster with faster invoice processes. Establish a set billing schedule preferably weekly if the deliveries do not automatically trigger an invoice. All invoices should include a payment due date along with invoice notes and terms and conditions.
Related post: 8 Quick Ways to Improve Cash Flow of Your Business
5. Follow up on Default Payments –
? Don’t allow an invoice to remain overdue for a very long time.
? Call the customers and ask for payments as soon as the bill becomes overdue
? Make your delinquent customers with genuine financial problems to pay at least a small amount periodically.
? When necessary, don’t hesitate to seek professional help from an attorney or collection agency.
6. Review and Reduce Expenses – Place the expenses on the bottom line as a favorable impact when necessary. Switching from a weekly to a bi-weekly payroll processing costs reduces the operating costs. Be careful not to cut costs that could hurt profits. For instance, rather than cutting the marketing budget, redirect the money to areas where it has a more positive impact.
7. Pay Bills on Time – Take initial steps to pay as late as possible but only to extent where they are required to pay your bills. Incur late fees or interest charges with the exception that could be made for bills where trade discounts are offered.
8. Trade Discount offers – Offering discounts on prompt payments encourage customers for making timely payments. Some customers will pay sooner rather than later depending on the incentives. Trade discounts typically give 1%-2% of the total amount within a certain no of days.
Keep the money flowing with the initial steps that could prove useful to small and medium businesses for maintaining a healthy cash flow. If there are any more ways that you feel could be helpful, then share them with us by leaving your comments below.
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The End.