Cash Flow In A Business Is The Same As Profit 3 Ways to Beat the Small Business Cash Flow Crunch

You are searching about Cash Flow In A Business Is The Same As Profit, today we will share with you article about Cash Flow In A Business Is The Same As Profit was compiled and edited by our team from many sources on the internet. Hope this article on the topic Cash Flow In A Business Is The Same As Profit is useful to you.

3 Ways to Beat the Small Business Cash Flow Crunch

What do 90% of business failures have in common?

Lack of cash.

Cash is king. According to Dun and Bradstreet, 90% of business failures occur due to poor cash flow. In today’s fragile economy, maintaining a strong positive cash flow for your small business is more important than ever.

Small Business Cash Flow Basics

Well, right? Any high school economics student can tell you that positive cash flow is important to small businesses. But knowing cash flow and maintaining a positive cash flow for your business are two different things. So what should you consider when it comes to your business’s cash flow? Cash flow is affected by three factors:

– Receivables (money flowing into your business)

– Liabilities (money flowing out of your business)

– Overheads (a subset of liabilities)

In this article, I offer you three ways to increase cash flow in your business.

3 ways to increase cash flow to your business

If your accounts receivable records are good, your business cash flow should be good, right? Wrong. A positive receivables column only helps your business if you can turn your receivables into cash. Your business accounts receivable is a list of money you owe your business. But being in debt and having cash in your coffers are two different things. So how do you turn receivables into cash faster for your small business?

1. Bill promptly and accurately

Another “Duh!” suggestion, but you might be surprised at how many small business owners are guilty of neglecting to bill regularly and promptly, viewing it as just another paperwork hassle that takes a back seat. If your small business isn’t charging right away, start now. If necessary, assign an employee to perform this task. When working on long-term projects, agree to bill monthly for work in progress and ask for a deposit before starting the project. Also, be very careful and detailed when billing. Nothing puts a strain on a good business relationship like a billing error. Review your invoices for errors and omissions before you send them.

2. Avoid slow or non-paying customers

You might be surprised at the types of customers who are slow payers or outright delinquent. According to Dun and Bradstreet, the worst slow-paying offenders are large companies, those with 500 or more employees. These companies take an average of 62.7 days to pay, more than 4 weeks beyond the usual 30-day deadlines. Here’s another shocker: the most common defaulters are customers who owe $500 or less. Apparently, these customers consider this amount of cash insignificant and do not feel guilty for not paying.

Before hiring a new client or extending credit to them, do your homework. All new customers can be credit checked by an external agency or request credit references and check yourself. Another option is to call other companies that do business with your customer to find out if the customer is paying on time. If the lead turns out to be slow/non-paying, don’t take it. In tough economic times, it may seem crazy not to take all the business you can get, but non-paying customers can have a serious and negative impact on your cash flow. Not only will you be waiting endlessly to be paid for goods and services that have already been delivered, but you will also be using a lot of internal resources to track delinquent accounts and chase money. The best policy is, “Just say no!”

3. Plan for quick cash

There are two ways to get your customers to pay early. First, when concluding a contract with a customer, you can negotiate short payment terms. Nowadays, many small businesses require the terms “net 15?” and they get them. See what they are if your customers are ready for these terms. Second, if you don’t like asking for “net 15? terms, you can offer customers a discount for early payment. Offer a one to two percent discount for paying within 10 days. Although you’ll lose some money from the discount, your overall cash balance will be much healthier .

These three simple cash flow management strategies could be the difference between your small business going broke or becoming one of the 90% that fail.

Do you have your own unique ways to maintain or increase cash flow in your business?

Video about Cash Flow In A Business Is The Same As Profit

You can see more content about Cash Flow In A Business Is The Same As Profit on our youtube channel: Click Here

Question about Cash Flow In A Business Is The Same As Profit

If you have any questions about Cash Flow In A Business Is The Same As Profit, please let us know, all your questions or suggestions will help us improve in the following articles!

The article Cash Flow In A Business Is The Same As Profit was compiled by me and my team from many sources. If you find the article Cash Flow In A Business Is The Same As Profit helpful to you, please support the team Like or Share!

Rate Articles Cash Flow In A Business Is The Same As Profit

Rate: 4-5 stars
Ratings: 6422
Views: 7982559 0

Search keywords Cash Flow In A Business Is The Same As Profit

Cash Flow In A Business Is The Same As Profit
way Cash Flow In A Business Is The Same As Profit
tutorial Cash Flow In A Business Is The Same As Profit
Cash Flow In A Business Is The Same As Profit free
#Ways #Beat #Small #Business #Cash #Flow #Crunch

Source: https://ezinearticles.com/?3-Ways-to-Beat-the-Small-Business-Cash-Flow-Crunch&id=2547626