Give your business a cash transfusion!
Cash flow is the blood that lubricates the components of your company. When the cash runs out, the gears lock up and the machinery of your business is in trouble.
Improving your cash flow is the same as increasing sales volume without hiring more sales people or staying open longer! You are essentially creating free money!
Cash flow inefficiencies and problems are not limited to startups and early-stage companies. Too many times, companies don't know or don't understand the importance of cash flow. It's all too common for business executives to grossly underestimate the amount of time and capital necessary to reach and maintain cash flow break-even, causing many promising businesses to shut down prematurely.
Check out the 10 most powerful techniques I've used to maximize my business' cash flow. These techniques can be done all at once or in phases, depending on your business (and your courage).
Please share with our readers other good cash flow techniques that have worked for you in the comments section.
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GeriStengel said on 29 Friday 2011 pm31 9:55 pm: Good to focus on cash flow; people often don’t. And I’m big fan of open management. Employees will work smarter when they know what’s at stake. They’ll also come up with ideas for saving. But that net 10 or net 15 thing may be harder to do than you think. Some big corporations -- read “critical partners for small businesses†-- are boosting their own cash by paying in 90 or even 120 days. I think this policy is unethical ; I also think that small businesses must refuse these terms en masse to make the point that being big doesn’t give you the right to be a bully. |
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If you need to finance your cash flow to process orders that factors won't handle, you'll have to use something like a revolving line of credit.
We have policy of refusing to pursue potential large corp. customers whose know payment policies is greater than 30 days, i.e GE or P&G. One of our best customer's normal terms is 60, we said no, and we settled on 30 days.
Open book mgt is the only way...you are not giving up control by sharing the Company's finances; you are gaining the "buy-in" of your Team.
Regarding the suggestion that prices be reviewed Quarterly. I think that is an excellent suggestion, especially as we go into an inflationary, maybe stagflationary period, caused by too much QE2. I will get to work on that immediately, (sorry customers.)
About getting your salesmen to be collectors, I am not too sure that this is a good idea from a long-term standpoint. It puts the salesperson in an awkward position at best and at worst in an inexperienced position that could cost future sales. Try the factoring company for this.
About open-book management: My concern is that they will be like my ex-wife, questioning my lifestyle versus theirs if they "know enough to be dangerous", (just kidding honey) or it may cause issues and problems that I haven't even thought of. especially privacy issues that may be used against me later on. Nevertheless, I would like to hear thoughts or experience on the downside of this strategy and how to mitigate them.