NEBS Computer Forms: NEBS offers a wide variety of easy-to-read invoices and other forms that help businesses be clear about charge and timely payment expectations!
Managing cash flow is one of the most difficult management challenges facing owners of small businesses. What is cash flow? Quite simply, cash flow is the comparison between the actual money going out and the actual money coming in over the same time period. This is why having a good system in place to keep accounts receivable on track is so important to small businesses.
Too much of the first--money flowing out--and too little of the second--money flowing in--can make a business go out of business, even though the receivables noted on the books may represent strong profit. There are many tactics a small company can pursue to stretch cash through tough times.
The best tactic is effective planning that helps you spot cash flow problems far enough in advance so they don't become problems, including knowing what sales numbers you need to maintain. Plan a workable invoicing and collecting policy, too, and put it in place to avoid problems with receivables, not correct them.
Positive Cash Flow Tactics
Get cash payments in advance, especially on large orders. Ask for a 50% advance payment for at least some orders.
Seek timely payments from customers by systematizing your billing procedures.
Cut off support services to customers that don't pay or are especially slow in paying.
Seek discounts from vendors with whom you work regularly.
Use your vendors, if necessary, by paying accounts payable in 60 days instead of 30 days.
Establish accounts receivable financing with the right bank, if needed.
Take the maximum time possible to pay off loans.
Next Topic: Collecting Bills Keeping Customers