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    Ways To Improve Cash Flow

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    Ella
    The document provides 10 tips for improving a business's cash flow: 1) Create a cash flow improvement plan and designate monitoring roles; 2) Evaluate customer and supplier payment terms; 3) Negotiate payment terms and use electronic payments; 4) Speed up accounts receivable and payable processes; 5) Offer payment incentives and penalties; 6) Manage inventory more effectively; 7) Review and reduce expenses; 8) Boost company income through sales and marketing; 9) Set cash flow goals and forecast projections; 10) Leverage cash flow technology. Improving cash flow management benefits businesses of all sizes by increasing liquid assets and the ability to pay expenses.

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    Ways To Improve Cash Flow

    Uploaded by

    Ella
    36 views3 pages
    The document provides 10 tips for improving a business's cash flow: 1) Create a cash flow improvement plan and designate monitoring roles; 2) Evaluate customer and supplier payment terms; 3) Negotiate payment terms and use electronic payments; 4) Speed up accounts receivable and payable processes; 5) Offer payment incentives and penalties; 6) Manage inventory more effectively; 7) Review and reduce expenses; 8) Boost company income through sales and marketing; 9) Set cash flow goals and forecast projections; 10) Leverage cash flow technology. Improving cash flow management benefits businesses of all sizes by increasing liquid assets and the ability to pay expenses.

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    The document provides 10 tips for improving a business's cash flow: 1) Create a cash flow improvement plan and designate monitoring roles; 2) Evaluate customer and supplier payment terms; 3) Negotiate payment terms and use electronic payments; 4) Speed up accounts receivable and payable processes; 5) Offer payment incentives and penalties; 6) Manage inventory more effectively; 7) Review and reduce expenses; 8) Boost company income through sales and marketing; 9) Set cash flow goals and forecast projections; 10) Leverage cash flow technology. Improving cash flow management benefits businesses of all sizes by increasing liquid assets and the ability to pay expenses.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    36 views3 pages

    Ways To Improve Cash Flow

    Uploaded by

    Ella
    The document provides 10 tips for improving a business's cash flow: 1) Create a cash flow improvement plan and designate monitoring roles; 2) Evaluate customer and supplier payment terms; 3) Negotiate payment terms and use electronic payments; 4) Speed up accounts receivable and payable processes; 5) Offer payment incentives and penalties; 6) Manage inventory more effectively; 7) Review and reduce expenses; 8) Boost company income through sales and marketing; 9) Set cash flow goals and forecast projections; 10) Leverage cash flow technology. Improving cash flow management benefits businesses of all sizes by increasing liquid assets and the ability to pay expenses.

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    of 3

    WAYS TO IMPROVE CASH FLOW OF YOUR BUSINESS

    Improving cash flow is a big help no matter what type of business you’re running, how long
    the company has been around, or what size of company it is. Every business faces the
    challenge of managing cash flowing in and out and the more you can improve that process
    the better off your business will be.

    It’s important to realize that cash flow isn’t the same thing as profit. You can be making a
    profit but still have negative cash flow. In “negative cash flow,” the company’s liquid assets
    are decreasing and you won’t be able to pay your expenses. In contrast, “positive cash flow”
    is where the company’s liquid assets are increasing.

    1) Create A Plan
    Start out by getting the whole company on board with making cash flow improvements a
    priority. Everyone won’t all be directly involved, but a shift in priorities overall will help make
    the specific tasks easier as you create a plan for how you’ll implement cash flow
    management strategies. As you start out, you’ll want to designate cash flow monitoring to
    one or more trusted employees. And you might find it helpful to break-down customers,
    suppliers, and inventory into separate categories rather than tackling cash flow as a whole.

    2) Evaluate Customers and Suppliers


    Take a close look at your customers and suppliers when evaluating your cash flow. This is
    the time to examine the terms you have with long-standing customers and suppliers and re-
    negotiate those terms if they’re hurting your business. If you find a problem with an existing
    relationship, reach out and try to fix the issue. And when you’re taking on new customers or
    suppliers be sure to run a credit check and find out if they’re going to be a liability.

    3) Negotiate And Work With Payment Terms


    Paying bills on time, and thereby avoiding late fees, is one of the simplest steps towards
    improving cash flow. You can also look into negotiating early payment discounts with your
    suppliers. And if they’re not open to early payment discounts, then negotiate for long
    payables terms and set up electronic payments so you can wait until the morning that the
    bill is due to pay.

    4) Speed-Up Your Receivables Processes


    The more quickly you’re able to handle business processes in your accounts payable and
    accounts receivable departments, the easier it will be to access your money. Be sure to
    send invoices promptly so you can get paid sooner. And if they don’t pay by the
    deadline, follow-up promptly and enforce payment disciple. Once you have been paid,
    deposit payments promptly so you can actually use and access the cash.

    5) Create Incentives To Pay


    One of the best steps you can take to immediately improve cash flow is offering incentives
    to your clients who pay early and adding penalties when accounts are late. That means
    offering a slight discount on early payments and adding interest to payments that run late.
    Implementing this new payment policy means you’ll get more of your payments on time.
    Plus you’ll be improving customer service for your best customers.

    6) Manage Inventory More Effectively


    Your inventory management might not seem related to cash flow, but it actually plays a big
    role. Items sitting on your shelves represent cash that’s not moving. And there’s no point in
    tying up your cash by keeping a surplus of products around or stocking products that only
    sell sporadically. Consider having a blowout sale to clear out a surplus of inventory. Then
    work to improve inventory tracking and management so you can avoid tying-up cash there
    in the future.

    7) Review and Reduce Expenses


    Reducing your expenses is another way to improve cash flow. Review your expenses and
    then cut back in areas that won’t affect your profits. For example, you can cut overhead
    costs by switching from a weekly to biweekly payroll schedule since that will reduce
    processing costs without affecting the bottom line. In contrast, you won’t want to cut-back in
    marketing. Rather, you’ll want to make sure the marketing budget is being used effectively
    to increase sales.

    8) Boost Company Income


    Increasing your income is an obvious way to improve cash flow. Take a good look at your
    options for improving sales and making more money. You might boost sales with creative
    incentives like hosting a contest or customer event. You can also look into ways to improve
    your marketing strategies. And finally, see if increasing prices is an option. You might be
    afraid of losing customers if prices go up, but there’s nothing wrong with a little
    experimenting to find the perfect number. This is especially important if your costs went up
    but you haven’t yet increased prices to compensate.
    9) Look To The Future
    Knowing your breakeven point won’t affect cash flow. However, it does give you a goal to
    work toward when managing future cash flow. You want to aim for the point where your
    business starts to turn a profit and has positive cash flow at the same time. With that goal in
    mind, come up with a system for cash flow projections in your company. A rolling 12-month
    forecast, for example, will help you keep an eye on how well your company is doing
    implementing the new cash flow policies. It’ll also give you a guide to work toward achieving
    your cash flow goals.

    10) Leverage Technology


    Technology like cash flow spreadsheets, accounting software, and payment management
    systems are your best friends when you’re working to improve cash flow. The more you can
    improve the business processes involved with cash flow, the easier it will be to manage the
    cash that’s going through them. Things like accounts payable automation, online
    procurement software, and 3rd party payment management are all going to help with
    improving cash flow.

    Source: http://www.nextprocess.com/blog/10-essential-tips-improving-cash-
    flow-company/

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