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Business Cash Flow Tips

Apr - 4 - 2013

In the current economic climate, and the difficulties associated with it, business can be tough in a number of different ways. However, one of the most important, and most common, problems faced is that of cash flow.

Businesses can often have a hard time ensuring that cash continues to flow through their business, keeping it healthy and driving towards future growth.

This can have a devastating effect on a company’s ability to maintain a good reputation and meet all those commitments made to customers and clients. Consequently, it’s vital that mechanisms ensuring the continuation of healthy cash flow are integrated into any business plan and, if necessary, professional experts are used to advise and direct.

One of the primary ways in which a business ensures a good cash flow, is by ensuring that customers are able to pay and pay on time. A business may prefer to utilise their own measurement standards and techniques, or an established form of check, such as a credit check, could be used. Though it may seem counter-intuitive to turn away business, it is important to remember that in the early years your business is particularly exposed to a poor cash flow and new customers and clients that can’t meet their payment commitments present a great risk.

Cashflow advice

In order to ensure prompt payment, it is usually a good idea to lay down all the details of a payment in writing as the deal is agreed. These should include the length of the payment period, the method of payment and whether or not the size of installments has been agreed. This will not only ensure that there is no confusion when it comes to payments, but also prove a valuable source of evidence when attempting to prove that a company has missed or made late payments. These details should also form part of the invoices sent out from your business.

Most businesses will employ some means of judging when money is entering and leaving their accounts in an effort to ensure that any trend towards a negative cash flow is recognised early on. This may be as simple as a spreadsheet or as complex as purpose built software. Either way, it is important to maintain some form of monitoring system, so that you know when revenue from sales will enter your accounts.

Finally, there are always ways you can free up cash to reinvest in the company - it is just a matter of doing your research. Expert business restructuring advisors can assist business leaders in working out how to free up cashflow to restructure their businesses. For example it may be as simple as switching the office energy provider or looking into the possibility of using different suppliers.

Freeing up the cash flow can make the difference to a business, so seek professional advice if you believe it is holding you back.

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