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 IMPROVING CASH FLOW - Bill Promptly and Accurately - Bill the same day as you provided the service or shipped the product.
- Manage your Inventory - Figure out which items are turning quickly and which items tend to stay on the shelf longer and adjust your purchases to match your products turnover rate. Get rid of inventory that you are not selling in bulk to generate some cash.
- Have customers pay to a Bank Lock Box with a sweep function
- Establish a relationship with a third party lender to finance customer purchases
- Offer discounts for prompt payment - In practice this may not work as some customers will just pay late and try to take the discount which creates a bigger problem. This really depends on your customers. This works better with bigger companies.
- Ask customers for deposits where appropriate.
- Do better credit checks up front before you do business with customers.
- Focus on collections by having weekly collections meetings with specific action plans and follow up procedures with customers.
- Give customers and employees items that are tax deductible like gifts instead of meals which have a 50% limitation.
- Prepare a cash flow plan.
- Pay vendors according to terms not early.
- Use electronic funds transfer to make payments last day they are due.
- Take vendors offers for a cash discount when paying early.
- Look for vendors with more flexible payment terms. Negoitate more favorable payment terms with your vendors.
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