It's All About Cash Flow!

This message should be displayed on signs in every small business: Managing cash flow is a crucial aspect of running a successful company, as it is used to expand the business, pay employees, vendors, and the owner.

Without cash, a company will ultimately fail. Hence, it is necessary to implement systems that ensure continuous cash flow.

Regrettably, not all businesses can collect payment upon delivery of their product or service. When this occurs, the business is owed money, leading to stagnant cash flow and the creation of an account receivable.

Essentially, a receivable is a short-term loan to a client, spanning 30 to 90 days. While accounts receivable are a common aspect of business, it is essential for companies to manage them effectively to ensure prompt payment.

Timely billing and collection of accounts receivable are vital for maintaining a healthy cash flow. For expanding businesses, an increase in accounts receivable can exert additional pressure on cash flow. Consequently, business owners should regularly monitor their receivables, at least on a weekly basis.

Below are some strategies to manage your accounts receivable and enhance your cash flow:

1. You Are Not a Bank

Extending credit to clients is a monitored privilege, not an inherent right. Many small business owners hesitate to pursue overdue payments. Discussing finances may be challenging, but rightfully requesting payment for completed work or delivered products is justified.

Remember, collecting payments is essential for settling your own company's bills.

2. Payment Requests Earn  Respect

Clients respect businesses that assertively pursue owed payments. Diligently requesting payment due is not only about persistence but also about maintaining respect and ensuring the financial health of your company.