Business owners are facing supply chain issues, a drop in consumer spending and an increase in the time it takes to customers to pay. This all adds up to additional challenges business owners face as they manage their cash flow. Now is the time to proactively strengthen your cash flow. These tips should help.
- Use the latest computer software to automate your invoicing. By digitizing your invoicing process you can reduce the days it takes your customers to pay your invoices. Be sure to include all necessary information in your invoice; amount owed, product/service delivered, purchase order number and ACH instructions for your bank account. Replacing paper checks sent by the US mail with an ACH can easily save you five to seven days in waiting for payment. Your software should include a dashboard that will allow you to easily monitor your invoices and alert you if an invoice goes beyond the agreed payment terms.
- Take as long as possible to pay your bills. By holding on to your cash until your bills are due you will maximize your cash flow. Before you stretch out the payments to your key suppliers consider your relationship. Sometimes buying goodwill with a faster payment can make all difference when your vendor is facing their own supply chain disruptions.
- Negotiate with your vendors. The price you pay today should only be a starting point. Will your supplier offer volume discounts, extended payment terms, or a fast pay discount? Remember your suppliers are important to your success, but you don’t want to leave money on the table.
- Revisit your cash flow predictions. Every business owner needs to know when money is coming in and when payroll and expenses are going out. You will want to update your model at least monthly with your most current numbers. Watch for trends that will adversely affect you such as your receivables taking longer to pay.
By maximizing your cash flow now, you are better prepared to survive a challenging economy and take advantage of growth opportunities.
For 43 years American Receivable has helped our clients optimize their cash flow with our Top Rated Factoring service. Use our streamlined application to turn your receivables into cash. We give you the cash flow confidence you need to grow your business.