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| Avoiding the Cash Flow Crunch https://sabusinesshub.co.za/webforum/viewtopic.php?f=15&t=199 |
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| Author: | Luther Diedericks [ Wed Jun 28, 2006 8:46 am ] |
| Post subject: | Avoiding the Cash Flow Crunch |
Do you know the amount of cash you have on hand and are you prepared for the inevitable cash flow crunch? Successful small businesses understand how to manage their cash flow by tightening inventory, billing immediately after delivery, and stretching out payables. Depending on the severity of the cash crunch, they also engage in "factoring": Selling accounts receivables in exchange for instant cash. Get more information by reading the articles and tips below. Improving Your Cash Flow Cash shortages can prevent you from meeting your financial obligations, and they can make it difficult to plan for the future and expand your company. That's why you should try to improve your cash flow by making some minor adjustments in your business practices. These seven ideas can provide relief and ultimately change your cash flow. Improving Your Cash Flow Tighten inventory. Keeping too much product on hand can tie up a great deal of cash. Make sure your inventory turns over at a regular pace. Bill early and often. Bill a project when it's complete, and invoice products as soon as they ship. Keep a detailed receivables report and act immediately on overdue accounts. Don't expand until you have the cash to support growth. Figure out what your projected expansion will cost and make sure you have the cash to cover it. Have a cushion to cover a cash flow crunch. Chances are, a cash crunch will come sooner or later — perhaps due to a temporary slump in the economy or your industry. If you're prepared for rough times, you can ride them out. Stretch out payables. Don't pay every bill as soon as it arrives — wait 30 or 60 days and keep the cash on hand. If suppliers want their money more quickly, ask about discounts for early payment. Consider raising your prices. Check out what the competition's doing and make sure your prices or rates aren't too low. Comparison shop. The Internet makes it much easier to compare prices for everything from airplane tickets to office supplies to computers. Start using the Web to get the best deals. newsletters@allbusiness.com Luther Diedericks www.sabusinesshub.co.za [/b] |
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