As an entrepreneur, you may notice that your business’ sales revenues may be increasing at an impressive rate, which helps to boost your bottom-line profits. You may be under the assumption that your organization is moving in the direction you want it to go. However, prominent business experts say that even in this scenario, it is not prudent on your part to lower your guard. They explain the even the profitable business organizations can face a severe cash crunch, which can adversely affect their operations.
George S Ammar – 4 Simple Ways To improve your business’ cash flow position
George S Ammar, a popular financial professional from America, says you need to keep in mind the following 4 tips to improve your establishment’s cash flow position:
- Invoice your customers instantly
Like most entrepreneurs owning small establishments, you may generally issue invoices to your customers for the products they buy at the end of the month. The problem with this method is that the money which could be accumulating in your bank accounts is actually in the pockets of some other person. It would be prudent on your part to invoice your customers as soon as they make such purchases so that you can receive your money earlier. This goes a long way in improving your organization’s cash flow position.
- Offer your customers incentives for making prompt payments
To encourage your customers to pay the money they owe you promptly, you can offer them the certain incentive like cash discounts if they clear their dues with a certain period. This can help you get the money you need to operate your business earlier and avoid facing a cash crunch situation. It can also go a long way in encouraging your customers to make more purchases from your organization.
- Evaluate your receivables
You should make it a point to review your organization’s account receivables at regular intervals. This enables you to identify slow-paying customers and those whose amounts are already overdue. These are people who you need to ring up or dispatch an email asking them to pay the money they owe you. In the most extreme case, you could also impose harsh fines to discourage them from making late payments.
- Pay your suppliers when their bills become due
When you make purchases from your suppliers, they do not expect you to pay them immediately. In most cases, these businessmen allow you a period of 30 t0o 90 days to clear your dues. You should make it a point to scrutinize their term of payments and pay them the money you owe them when it becomes due. This helps you to improve your organization’s cash flow position because it allows you to keep money with your organization for a longer period.
George S Ammar says the above four tips go long a way in helping entrepreneurs improve their organization’s cash flow. In addition to this, these businessmen should pay attention to other areas where money could be flowing out of their business unnecessarily. If this is the case, they need to review the way they operate their businesses and allocate money to enhance their business’ cash flow position.