9.5 Techniques to Boost Your Cash Flow During Our Current Economy

9.5 Techniques to Boost your Cash Flow During Our Current Economy

Considering today's current economic crisis, do you know how you will be paying your company's bills when there is no cash flow? Here are 9.5 ways to effectively increase cash flow at anytime regardless of the economy.

What is cash flow and how can it be measured?

Any company's goal is to consistently generate a positive cash flow. Cash flow is the key to successful finances, owners' often-times overlook being penny-wise; however, managing yourself, your employees, and your company ensures good fortunes and finances. The primary principal of cash flow is as follows:

CASH IN - CASH OUT = CASH FLOW

Owners need to calculate cash flow monthly and project it at least 12 months out, thereby avoiding the pitfalls of running out of cash.

9.5 Techniques to Successfully Boost Owner's Cash Flow.

1. Organized Recordkeeping

Maintaining complete and accurate financial records ensures that a company operates efficiently and effectively. With well kept records and financial data, you are able to easily recognize all business expenses, and track income.

2. Collect Money and Fees Upfront

A business' main goal is to bring cash as quickly as possible into the company. Depending on your industry, collect the full amount or require half up front and the remaining balance upon delivery, secure money and fees in advance from patrons once the order has been made and the agreement is signed.

3. Collect Accounts Receivable

Ensure that your company receives payments promptly and continue to follow up aggressively on open accounts. Keep in mind the longer the account has a balance the less likely your business will be paid in full.

4. Audit All Expenses Yearly

Update and re-audit expenses yearly. Consider reviewing all fixed expenses, such as: insurance, worker compensation cases, and all forms of communication, rentals, equipment leases, and other fixed costs.

5. Extend Supplier and Vendor Debts

It is important that a business extend and draw out its open accounts with suppliers and vendors. Keep in mind it is important to maintain good relationships with merchants in order to stretch out the time frame in which you pay your company's debts. If prolonging the date isn't an option consider working out a lower monthly minimum payment plan.

6. Examine Employees and Make Personal Cut Backs

This will be a tough one but you need to do it. Step back and examine your entire workforce. Balance any cutbacks with your customer service requirement. If your service will suffer because of cutbacks, find other ways to cut cost. This should be your last option. Find ways of making your people more efficient instead.

7. Review Capital Assets

Another way to assist in increasing cash flow is to do a complete and thorough review of your capital assets. First, examine the company's unused and inoperable machinery and equipment. If you own older pieces that no longer operate don't let the items sit and take up valuable space, sell them and generate extra revenue to reinvest into working capital equipment.

8. Decrease Non-necessary Spending

One key element to be frugal is do not purchase items you simply do not need. Limiting the number of credit card holders and lowering credit limit will help with spending money you don't need to.

9. Inventory Management and Transportation Costs

Having an overly stocked warehouse reduces your company's cash flow. Also, consider buying office supplies in bulk from warehouse companies or purchase items online. In addition, keep and inventory count and supply tracking chart this helps monitor spending. Be aware of your shipping costs. Reduce and reconfigure freight rates. Shop around and send items in bulk versus individual units. Instead of sending important documents via the postal service or other carriers try faxing or e-mailing because these methods are not nearly as costly.

9.5 For Additional Assistance on Increasing Cash Flow Call Our Office

For more information contact the BUSINESS HOUSE, inc.^SM at 770-534-6630 to set up your free consultation and to learn more about our Exit Planning services.