Business Advise
Top Ten Tips for Improving Your Cash Flow
By Alvah Parker
Cash is king—so they say. If you work for yourself or someone else, you need
to be aware of ways to improve the cash flow. Budgeting and collecting are
not glamorous but they are both key to having a successful business. Working
in a successful business is much more fun than working for a struggling one!
1. Stick to your budget. (If you don’t have one, make one
now.) The budget is part of a business plan. You want to know exactly how
much to spend on each large item you purchase and when you will have the
cash to do it. Your cash flow projection coupled with your forecast will
give you the proper timing for making purchases. The items you have budgeted
for should also be part of the business plan.
2. Bill your clients regularly. Many business owners are so busy selling to
new clients that they forget to invoice the clients they have already worked
with. Put the task of billing your clients on your calendar and then stick
to that schedule.
3. Get a retainer for your services before you begin the work. If you are
going to be working with a client over a period of time, you will want to
request some money up front before you begin to deliver the service.
4. Give a discount for early payment. You will be able to collect the money
more quickly if you offer a discount for prompt payment.
5. Accept a credit card for payment. Although you have to pay the credit
card company for this service, having the convenience of a credit card
allows the client to pay immediately. Collection is now the problem of the
credit card company.
6. Use your own credit card to finance purchases but do it cautiously. If
the interest rate is low and you can pay the credit card company back
relatively quickly, credit cards are often a good way to even out your cash
flow.
7. Establish a line of credit with a bank. This is relatively easy to do so
long as you have good credit and it gives you a cushion of cash when things
are tight. Sometimes the bank will offer a really good rate to encourage you
to become their customer for other banking services.
8. Put the cash that you have on hand in an interest bearing account. No
reason to have cash sitting in an account that doesn’t accrue much interest.
As cash grows consider money market accounts, CDs and savings accounts.
9. Pay your outstanding bills judiciously. Notice which vendors are willing
to wait for payment and which will charge you interest if you are late.
Schedule payment to maximize the cash in your account.
10. Consider getting an expert to watch your cash flow. Have someone
(financial advisor, accountant, bookkeeper) available to run financial
reports each month so you know exactly where you stand in your business.
Alvah Parker is a Business and Career Coach as well as publisher of Parker’s
Points, an email tip list and Road to Success, an ezine. Parker’s Value
Program© enables her clients to find their own way to work that is more
fulfilling and profitable. Her clients are managers, business owners, sole
practioners, attorneys and people in transition. Alvah is found on the web
at http://www.asparker.com. She may also be reached at 781-598-0388.
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