Why Is It Important To Have A Cash Flow Plan 3 Ways to Beat the Small Business Cash Flow Crunch

You are searching about Why Is It Important To Have A Cash Flow Plan, today we will share with you article about Why Is It Important To Have A Cash Flow Plan was compiled and edited by our team from many sources on the internet. Hope this article on the topic Why Is It Important To Have A Cash Flow Plan 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 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 a small business. But knowing cash flow and maintaining positive cash flow for your business are two different things. So what do you need to consider when it comes to the cash flow of your business? Three factors affect cash flow:

– Receivables (cash flowing into your business)

– Accounts payable (cash flowing out of your business)

– Overhead costs (subgroup liability)

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

3 ways to increase cash flow in your business

If your accounts receivable record looks good, the cash flow of your business should be good, right? false The positive receivables column only helps your business if you can turn your receivables into cash. Your company’s accounts receivable is a list of the money you owe your company. But being in debt and having cash in hand are two different things. So how do you turn accounts receivable into cash faster for your small business?

1. Bill quickly and accurately

Another “Duh!” suggestion, but you might be surprised how many small business owners are guilty of neglecting regular and prompt billing, seeing it as just another paperwork hassle that takes a back seat. If your small business isn’t charging right away, start now. Assign an employee to perform this task if necessary. When working on long-term projects, arrange monthly invoicing for work in progress and ask for a deposit before you start the project. Also, be very careful and detailed in billing. Nothing puts a strain on a good business relationship like billing errors. Check invoices for errors and omissions before sending them.

2. Avoid slow or non-paying clients

You might be surprised at the types of clients 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. On average, these companies take 62.7 days to pay, more than 4 weeks after the usual 30-day deadlines. Here’s the second 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 taking on a new client or granting them credit, do your homework. You can perform a credit check on all new clients using an external agency or request credit references and perform your own check. Another option is to call other companies that do business with your client to find out if the client pays on time. If the prospect turns out to be a slow/unpaid guy, don’t accept him. In bad economic times, it may seem crazy not to take all the work you can get, but non-paying clients can seriously and negatively affect your cash flow. Not only will you be waiting endlessly to be paid for goods and services already delivered, but you’ll also be spending a lot of internal resources chasing unpaid invoices and chasing cash. The best policy is: “Just say no!”

3. Plan for quick cash

There are two ways to get your customers to pay early. First, you can agree on short payment terms when you sign a contract with a client. These days, many small businesses are asking for and getting “net 15?” terms. See which if your clients are ready for those conditions. Second, if you are not comfortable 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 will lose some money because of the discount, your total cash balance will be a lot healthier.

These three simple cash flow management strategies could be the difference between your small business breaking even or becoming one of the 90% failure companies.

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

Video about Why Is It Important To Have A Cash Flow Plan

You can see more content about Why Is It Important To Have A Cash Flow Plan on our youtube channel: Click Here

Question about Why Is It Important To Have A Cash Flow Plan

If you have any questions about Why Is It Important To Have A Cash Flow Plan, please let us know, all your questions or suggestions will help us improve in the following articles!

The article Why Is It Important To Have A Cash Flow Plan was compiled by me and my team from many sources. If you find the article Why Is It Important To Have A Cash Flow Plan helpful to you, please support the team Like or Share!

Rate Articles Why Is It Important To Have A Cash Flow Plan

Rate: 4-5 stars
Ratings: 7749
Views: 1175259 9

Search keywords Why Is It Important To Have A Cash Flow Plan

Why Is It Important To Have A Cash Flow Plan
way Why Is It Important To Have A Cash Flow Plan
tutorial Why Is It Important To Have A Cash Flow Plan
Why Is It Important To Have A Cash Flow Plan free
#Ways #Beat #Small #Business #Cash #Flow #Crunch

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

Related Posts