Cash Flow Conversions are like the ocean tide. They are the ebb and flow of your business’ capital. They come in from customers and go out to bills. But unlike the tide, most business owners can not depend on the timing of Cash Flow Conversions.
More often than not, business owner's receivables and payables are out of sync, leaving them short on cash. This cash shortage is called a cash flow gap. For small and mid-sized businesses a cash flow gap can be extremely damaging. So in this article I would like to give you a few tips that may help you shorten your Cash Flow Conversions.
First, perform a Cash Flow Analysis (see “How to Perform a Cash Flow Analysis”) and if you are battling cash flow gaps try the following:
- Prepare and present an invoice to your customers when you deliver your goods/service instead of mailing it later.
- Offer a discount to early paying customers, i.e. 3% if they pay in 15 days.
- Track over-due accounts and send them to collections.
- Or if you prefer not to handle your cash flow management hire a Factoring Company who will purchase your invoices giving you cash upfront and will also perform all of your businesses cash flow management responsibilities.
So there you have it! Just remember, be proactive not reactive! If you monitor your cash flow and use these tips to shorten your cash flow conversion period you will out smart those horrific cash flow gaps!
If you are interested in learning more about Factoring or would like to see if we can help you with your cash flow management please visit: www.universalfundingmain.com or call 1-800-781-3978
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