Cash Flow Tips

Here are a few quick and easy ways to accelerate your company’s cash flow…

Turn credits into refunds

  1. Review the Accounts Payable Aging monthly to identify vendors with credit balances
  2. Contact all credit balance vendors to request a refund check be mailed promptly

Extend vendor payments

  1. Contact each vendor to negotiate payment terms; extend wherever possible
  2. Discuss alternate payment methods each vendor is prepared to accept

Accelerate customer payments

  1. For larger sales, request a portion of fees at the time the sale is initiated
  2. Schedule interim payments throughout long projects
  3. Consider offering a small discount for early payment

Electronic payments 

  1. Save paper, postage, and often, manpower
  2. Electronic payments can be scheduled for the exact due date, deferring the outlay until the latest time without incurring late fees
  3. You may be able to negotiate lower prices with vendors by paying promptly and electronically via wire or ACH

Accept Credit Card payments

  1. Set up the mechanism to accept payments via credit card or PayPal to have funds transferred directly into your bank account, saving the 30+ day wait to receive a check
  2. Consider the fees associated with credit card acceptance, however, when offering customers a discount for credit card payments

Business Line of Credit

  1. A business line of credit has greater flexibility than other loan options
  2. It can be used to cover cash flow deficits on short notice (ie: to purchase seasonal inventory or to cover unforeseen operating expenses)
  3. Interest accrues only for the period the LoC is in use, and can be paid off in full regularly

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