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Ways to Manage Your Business Cash Flow
“The Gospel of Wealth,” according to Andrew Carnegie, says that any man who dies thus rich dies disgraced.
Carnegie was a wealthy businessman to the point of giving away a good portion of his money. He amassed a lot of wealth and left behind one thing that would help humanity throughout their lifetime “the world’s greatest research universities.”
Carnegie is one of many successful entrepreneurs, and at some point in life, we look at these people and wonder how they hacked it.
Well, there is no one size fits all solution to amassing wealth but if you are a smart entrepreneur then you will well be in the line of becoming a self-made billionaire like Richard Branson.
We will, therefore, provide you with tips on how best you can manage cash flow in your business.
Business Cash Flow Management
Once you have been able to get a good credit score thanks to the Net 30 account, funding shouldn’t be a big concern and that is why you see many companies like getting Crowns Net 30 application, because if you keep up with the agreed payment plan they can influence your credit score reputation to lenders.
Entrepreneurs, therefore, need to worry more about how they are going to manage their cash flow, to which end we have outlined tips that you can use to keep your business alive and running.
- Insist on quick payments
You are obviously not going to be blasting your customer’s phone with calls or sending them endless messages, but you will be very civil about this and find a way of introducing a discount where customers get a certain percentage off if they can pay before the agreed-upon time.
- Minimize the expenses
Cutting costs especially on goods that don’t seem to move or take a lot of time before the customers can fulfill their payments should be discontinued for some time so that the resources can be dedicated to other more promising products and services. Laying off workers is also a way of ensuring that cash flow doesn’t cease, you can, therefore, get the contract employees in place of the full time. Advertising and vehicle expenses can also be reduced to properly manage the existing cash flow.
- Request for a milestone
One sure way of getting your clients to pay up is asking for a milestone payment, and while many clients might not be up to it, asking doesn’t hurt. You can also set it as a pre-requisite for a certain amount of goods, if they want so many goods on credit they should at least be able to pay the half price upfront and the remaining in the agreed timeline, a Net 30 application could also suffice in this instant.
- Negotiate for favorable payment terms
Your ability to make timely payments will give room for negotiations when you need to extend your payment deadline by a few days. Take for example if you are signing up for the Net 30 and are sure that you might not be able to fulfill the payment then ask for an extension. The above gives the vendor the peace of mind knowing you will fulfill your payments after the next two weeks.
Wholesalers are dependent on both the small and big retailer shops to survive, so for as much as you need them, they are on the other side obligated to ensure that the relationship existing between them and their clients is sustainable and which will involve bending some rules and adjusting the payment terms.
What is Cash Flow Management in a Nutshell?
On the books, business cash flow management entails monitoring, analyzing, and optimizing the net amount of cash receipts, without the cash expenses. As an entrepreneur, you obviously want to manage your cash flow and this you can do by first reviewing the history of your cash flow and to understand them better; you can break them into monthly periods.
Also, ensure that your customers have an easy payment process because delays and longer payment processes could make you lose out on cash; additionally, ensure that your system and processes work effectively.
Cash flow management is also tangled with transparency, the above is a clear indication of good cash management processes and the use of automated processes only makes thing better because you will be able to do transactions faster, respond to customers on time and you will be able to store and retrieve cash on time.