A Comprehensive Guide to Healthy Cash Flow

Maintaining healthy cash flow is an important consideration for any business. First steps include collecting receivables as rapidly as possible and delaying payables until absolutely necessary. Reimbursing vendors by credit card also offers a brief extension of the payment process. Here are some longer-term ways of cultivating healthy cash flow.

Create Projections

Often new businesses overspend on employees and inventory in the first rush of company growth. This can be ruinous in the long term. Before unexpected cash flow trends blindside you, create projections of income and expenses from a week to up to a year ahead. These estimates give you insight into possible upcoming difficulties.

Break It Down

Instead of looking at the company as a whole when analyzing cash flow and creating projections, break it down into segments, and focus separately on the details of inventory, suppliers, and customers. Considerations for inventory include the volume of sales for individual products and the possibility of capital tied up in items that don’t sell well. The value of specific suppliers and clients must be analyzed on an individual basis.

Share the Load

Share the vision for improving company cash flow with all of your personnel. Set specific goals for salespeople, collection agents, and other employees whose work directly impacts upon company cash flow.

Improve Collections

Consider methods for improving your collection system and customer service with a view to streamlining payments. Be sure to have reliable accounting software to be able to track receivables and payables closely. Watch for situations that need attention such as habitually late-paying clients and tardy settlements of company bills.

Reconsider Terms

Determine whether the terms that your company offers to clients are conducive to healthy cash flow. If they are not, revise them to meet your needs. Compare the terms of your suppliers with those of their competitors, and reevaluate whether you have chosen the vendors that partner best with your cash flow goals.

For more advice on maintaining healthy business cash flow, contact Commercial Capital Lending.


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