Protecting your Business Cash Flow

The current financial crisis has already had far-reaching effects upon organizations in every sector of our economy, and it's likely that there will be more to come. The inability to obtain credit has decreased the amount of inventory that companies are able to access and maintain – inventory that's vital for conducting business on a day-to-day basis. The lifeblood of virtually every business is its cash flow. If you're a business owner – whether small or large, home-based or from a separate commercial property – here are a few tips that will help you to protect your cash flow:

  • Depending upon whether your standard method of doing business requires payment up-front from your customers or you typically offer them a line of credit, you may wish to begin contacting them to pay their bills. If some of your customers have been a bit lax in making payments and have outstanding and overdue balances, give them a call and offer a reduction of their total balance in order to facilitate a quick payment.
  • One of the most fundamental of all good business practices is to ensure that invoices are sent out in a timely manner. Make absolutely certain to bill your customers within a few days of fulfillment and/or completion of the order or service that you provide.
  • If you operate a home-based business in which you perform a service for a client such as programming or graphic services for websites, ask for payment up front. If the client ultimately isn't satisfied with your work, you can refund all or a portion of the money paid. Additionally, if you're selling a product (either on- or offline), you may want to offer a discount to clients that pay your invoice within a certain number of days.
  • Prioritize any and all payments that you must make. For example, if you have an at-home business in which you're sub-contracting work out to others, ask these individuals if they can wait a week for payment. But, if you have bona-fide employees working for your company who are on your payroll, be absolutely sure to pay them first. Vendors typically require payment for their goods within sixty- to ninety days. And, if necessary, you may be able to work out payment terms with your telephone and utility providers.
  • If (and only if) things get really tight, you can resort to asking friends or family members for temporary assistance. Also, in some cases, your most loyal customers may be able to give pre-payment for future products and/or services. It can't hurt to inquire, but you must travel this avenue with the utmost caution and responsibility.

If you've been diligent in your work ethic and business practices, there will still be alternatives available to you even though you may experience a setback during this economic downturn. You may even be surprised to find that most people really do understand the notion that things have gotten a bit tough for many – as long as you, too, don't neglect that fact. Most importantly, don't give up. Regardless of how it may seem right now; this storm is only temporary. You can make it through!

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