Cash flow represents healthy incomings and outgoings of cash that will have a positive reflection on the operations within your business.
Mismanagement of operations in your business will hinder your cash flow.
Here are the common causes of cash flow problems in small businesses.
• Lack of payment term discounts- Allowing customers to make payments after you have delivered the service/product will result in cash flow problems. Introduce discount terms that will encourage your clients to pay sooner.
• Lack of tracking- Keeping track of your business success is a significant factor to how you will set out your long-term plans. Introduce tracking systems such as inventory management where your business is operating in order to facilitate progress.
• Failure to perform client credit checks- Always validate new clients credit history before doing business with them.
• Lack of credit insurance- This will be particularly essential when dealing with international clients in the case of payments being retrieved slowly or possible defaults.
• Slow product or service turnaround- Shorten the delivery times of your products or services to maximize the potential profit.
• Taking cash instead of credit- Formulate methods of payments within your business structure to only allow credit cards/ online banking systems to avoid the waiting period from payments via cheques.
From your experience as a small business owner, what other factors have you been challenged with that resulted in cash flow problems for your business?
Post By: SimplyBiz This article has been repurposed for this blog. Original article can be sourced from Top 7 Business.com