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5 Ways to Improve Cash Flow In Your Business June 17, 2009

Posted by Julie Duriga, CPA in accounting, Small Business, Uncategorized.
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There are so many ways that good accounting can save you a fortune,  this topic is virtually unlimited!  If we do a great job managing money that is owed us (money that is owed to us is a receivable) we might avoid borrowing or we could make money by charging interest on monies owed to us.  Receivables are an excellent place to start in our quest to make and to save a fortune.

  • Just Starting Your Business?  Terms for payment absolutely should be ” Due Upon Receipt.”  After all, you have just started your business and cash flow is probably a  little light.   You may want to appear as though you can afford to give terms of 15 or 30 days.  For most of us when we are starting,  this isn’t possible to give longer terms.  Use “Due Upon Receipt” or  ask for payment before they even before leaving the place of business.   It may even be necessary to say when they call for an appointment to say,  “Bring your checkbook.”


  • Watch Your Receivables Closely-If you see you have a customer who is not paying in the manner you have outlined, give them a call and see if they need help.  Check in and see if perhaps they need to make payment arrangements.  Don’t let your customers stray and put you at the bottom of the list because you are not making contact with them.  Unfortunately, it is your responsibility at times, to make collections calls.


  • Charge Interest!  If your business has been put in the position where your customers need your business to carry them for a short period of time, it is perfectly acceptable to charge interest.  Of course, if you are going to charge interest, this needs to be disclosed upfront on the first invoice what your intentions are.  For example, “10% interest is charged after invoice is 30 past due.”


  • Offer a 2% discount if your customers pay within ten days.  This is a great way to help your customers save money and for you to make sure that you get paid as quickly as possible.


  • Factoring?  There are companies that offer what is called factoring.  This means they will buy your receivables from you and your customers send the company the money instead of your business.  They buy your receivables from you at a lower price than what they believe they will collect.  This process gives you the upfront cash and the factoring company takes over from there.   This is usually only used if your business is in tough times but it is an option.

Managing your accounting is critical for long term success.  Even more importantly, it is critical if your business has receivables, to be attentive to them.  If you are attentive and proactive with your receivables, it is possible to avoid borrowing money.    It is possible for your business to make money by charging interest on invoices that go over 30 days.   Manage your receivables as if it were cash because your receivables are cash!  If you would like additional information on how good accounting can save you a fortune, visit us at our website at www.UniversityForBusiness.com.



1. Ernesto - June 17, 2009

Solution to SE tax
Open a Corp -elect S corp-

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