How to Improve Small Business Cash Flow
Charlene M. Ives, CPA, PC
Establish sound credit practices. Never give credit until you are comfortable with a customer's ability to pay.
Follow through on orders Fill orders accurately and efficiently. Not doing so will add days and weeks to customer payments.
Establish sound billing practices Bill promptly, with due dates and terms on your invoices. Try offering discounts for prompt payment.
Follow up on past due accounts The older an account receivable gets, the harder it is to collect.
Control your inventory It costs money to maintain too much inventory, and it is a waste of resources. Discounts on volume purchases may not always be worth it, if it means tying up your money.
Control your expenses Before taking on more expenses, make sure it's a worthwhile investment. Ask yourself: Will this expense allow you to improve services or products?
Keep a reserve of cash Decide on a minimum cash reserve and stick to it. Running low on cash all the time is demoralizing, and a drain of energy.
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