Tag Archives: Cash Flow

4 Easy Ways By Which Glitches In The Cash Flows Of Small Businesses Can Be Fixed

Businessmen who run small business usually worry over their cash flows not being positive even when their sales are running smoothly but somehow there is just not enough cash to make ends meet every month. The only possible cause behind this problem is that your customers are buying stuff from you on credit and they make late payments. But if this is not the case, then take a look at the 4 easy ways for fixing glitches in the cash flows of small businesses.

Don’t Slack When It Comes To Billing Clients

This is especially important if your business operates on credit payments. There is no way you can dilly-dally when it comes to sending out invoices to customers on time. Remember that if you do not send in the invoices immediately when the current month comes to a close, your customers won’t make payments on time which will eventually lead to problems in your cash flow statement. The best way to ensure timely payments from customers every month is to mail the invoice as soon as the job gets completed.

Increasing Prices When Needed

When starting a new business, small business owners have to sell out their products at ridiculously low prices in order to attract customers but by doing this, they barely make any profit. In fact, only the cost of the product is covered in the initial stages of establishing a business. Once you determine that the sales aspect of the business is going strong and customers keep coming in, it is time to increase the price of your product. However, it is important to raise the price gradually so that it does not bring a dry spell for the business in the coming weeks.

Get Hold Of Retainer Clients

Doing business is risky because sales are not guaranteed. There may be times when tons of customers will come barging in and then suddenly there will be days when the business won’t do as well as it should. If you are a lawyer or repair man offering services, you can easily battle the dry spell in doing business by getting hold of retainer clients so that you get fixed monthly payments for the services you render. Getting hold of retainer clients is undoubtedly the best way to tackle irregularities in the cash flows of your business.

Start Accepting Credit Cards

Last but not the least; you can fix your cash flows by accepting credit cards. Even though most small business owners prefer to operate their business on cash only, accepting credit cards is a great way to minimize the risk of receiving late payments. When running a business, it is important to facilitate customers as much as possible since people tend to stick to the businesses that they find convenient and flexible in terms of making payments. With credit cards, you can receive your pending payments within a day or two as compared to 30 days when customers are only asked to pay cash.

If you are having trouble with adjusting and balancing your accounts at the end of the month, contact SK Financial CPA to provide you with CFOs and CPAs on a contract basis to help you with book keeping.

How To Manage Debtors To Keep The Cash Flow Positive

Cash flow management is one of the most important aspects of a business that should never be taken for granted. If the cash flow management of a business is not smooth, it can face numerous financial and reputation-based issues, which just become more complex as the time goes by.

Big businesses that supply goods to their customers on credit mostly go through numerous debtor management issues, which can lead to financial issues for the business and a negative business cash flow.

Following are some tips for such businesses to effectively manage their debtors:

1- Adjust Accordingly

No client is the same. A business has a set of old clients that are trustworthy and new clients who cannot be trusted so much. Therefore, a business should keep the credit allowance and credit terms based on the type of customer it is dealing with.

Moreover, important information of all the clients asking for credit terms, whether they are new or old clients, should be sought which includes credit score, bank history, bank terms and financial transactions. All of this information should be evaluated before deciding the credit terms or thinking about allowing credit to the clients. If the financial information provided by the client seems too risky, the business can run a credit check on the client, just to be safe.

2- Make Everything Clear

While dealing with finances, businesses should not leave a room for doubt for the client. All the conditions should be well-communicated to avoid any future problems. Make sure that you give a precise due date of payment to the clients and stress it over so that it is taken very seriously.

If the payment is scheduled to be received after a few months, bi-monthly reminders should be sent to the client to assure that a thorough follow-up is in practice. Not notifying the client for a few months and then straight away calling them up for payment is a major mistake that most businesses make which results in delayed payments.

All the credit terms should also be well-understood by the client so that future scrutiny can be avoided.

3- Provide Numerous Methods

Businesses that provide their customers a vast range of payment options are more likely to get paid on time as it increases the ease of payment. Methods such as online banking and internet payment methods (for small payments) should be set-up so that the client can make the payment with absolute ease.

4- Installments

 Financial experts suggest that huge payments should be broken down into installments to ensure that timely payments are received and that the clients are not intimidated with paying a huge amount all in one go. This works best in keeping the cash flow positive and also decreases the financial risk in case the client defaults.

5- Default Cases

In cases of big payments, there is a higher chance that the debtors default in which a business can choose to hire a debt collection agency, if all the negotiations fail.