A Healthy Cash Flow is the Life Blood of Business
A healthy cash flow is the lifeblood of a business and is probably one of the most overlooked key performance indicators of the business.
Forget about your profit and concentrate more on your cash flow. If your cash flow is healthy your profit will look after itself.
Put your hand up if you have a “No Exceptions” money management (cash flow) plan in place that gives you, if not an accurate daily analysis of what your cash position, will be at least a weekly one. It is often one of the key reasons business fail – lack of adequate available cash to run the business effectively.
So how do you develop a successful money management plan:
1. Establish clear Payment terms with your customers
All your customers should have signed off your terms for payment which should outline due dates, the consequence for overdue payments such as interest rates and costs to collect.
2. Make it easy for your customers to pay you.
Customers should be able to direct credit to your bank account. Credit card facilities, including mobile phone provisions if applicable to your business, can make collecting payments timely and simple.
3. Make sure you invoice on time
If you want your customers to pay you on time you need get your invoices out on time. Try invoicing when the job is done rather than waiting until the end of the month. Consider implementing “due in 7 days” rather than the traditional 20th of the following month.
4. Focus on cash flow more than profit
Profit and cash flow are not the same
5. Use technology to monitor your cash flow
Setup your cash flow (Money Management System) on your computer so that it is always at your fingertips. Remember u