Cash Flow Efficiences - Cash is King

Cash flow efficiences is a big word for measuring a company's liquidity. Cash is King in todays economy, so finding ways to be efficient with each dollar is on the top priority of business owners' minds. If you are a small to mid-size company, as the owner you are the cash manager. You are concerned about when the dollars are coming in, and how they will be spent.

6 different medthods to help you keep on top of your cash flow will be discussed over the next 5 days. Today we will concentrate on getting your customers to pay you on time or up front. Cash management involves making sure the products that you are sending out are getting paid for by your customer. Some customers who are not being watched, can rack up a pretty high receivable before you try to collect the money. They have reasons - they have policies, but in a small business, you can not wait for 90 days to get paid, if you are having to pay your suppliers in 30. You need to be sure there is a direct connection between the sales payment and the supplies payment.

Review your customers open balances, and see how much did it cost you to deliver the finished goods. Can you take the funds from another customer to pay the vendors, until that customer can pay you? Do you know how much it is costing your business by not collecting the money within your terms? Can you afford to drop some customers that do not pay regularly? Do you have someone calling those customers frequently to be sure you are on the getting paid list? Does that customer have cash flow problems of their own?

Concentrating on your customer base and who is paying you, is your first priority of the six steps. Find vendors that may deliver the same materials for less cost, or different payment terms that fit in with your customer base. Do you accept credit cards? Can you offer a cash discount for early payment? Can you give an even bigger discount if they paid by cash, not check or credit card?

Analyzing your cash flow system is what RCM does on a day to day basis. We evaluate your customers and their payment habits to help you form a better relationship between your customer and your supplier.

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