How to improve your cash flow

Broadly, the headings that impact on your cash flow are Customers, Suppliers and Stock. There are small but significant changes that can be implemented easily that will have a positive effect on your cash flow and your knowledge of it. Before you start, do a quick analysis of the current situation. So for example, how long do your customers take to pay you, how long do you take to pay your suppliers and how much redundant or slow moving stock are you holding? If you are collecting your receivables in 60 days but paying your suppliers within 30 days then there is a 30 day imbalance that needs to be funded. Reducing this number will improve your cash flow. Let’s look at each heading in turn… Customers Prompt invoicing is key. If you sell goods or provide a service to a customer and then forget, or don’t get around to, sending the invoice then you are negatively affecting your cash flow. Even a day or two makes a difference. When you supply the customer, invoice the customer. Try to time your invoicing to coincide with your customer payment run. So if you know that a customer does a monthly payment run on the 1st of the month and your invoice doesn’t fall due until the 5th of the month, chances are your invoice will fall into the following months payment run. Offer your customers different payment options. If a customer receives an invoice as a PDF with an associated link that they can click on to make payment then they may well action it much faster than if they...