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8 tips to close the floodgates and improve your cash flow

Cash flow is definitely the lifeblood of every business. One of the biggest challenges while running a small business is cash flow management.

Read on to find out how you can close the floodgates and improve the cash flow of your business.

Insist on down payment:
This way, it is your customers and not you that fund projects. Also, ensure that you are paid in full upon completion of the project, without any 30 or 60 day extensions.

Prompt billing:
In case of long-term projects, make sure you negotiate in advance for regular payments.

Incentives for faster payments:
Offering a discount for quick payments reduces the time spent in waiting for payments.

No-pay customers are a strict no-no:
Make enquiries about a new customer. If they have a reputation for not paying on time, avoid them like the plague.

Reduce inventory:
Money spent on inventory does not create any interest or savings for you. So don’t keep too much product on hand, and make sure your inventory turns over at a regular pace.

Cash cover for expansion programs:
Expansion plans should be initiated only if you have the requisite cash to cover them.

Buy time for payables:
Wait for about 30 to 60 days before you make payments. If suppliers press hard, ask for discounts for early payments.

Cushion for the future:
Make sure you are adequately prepared to face a cash crunch in the future.

Implement these options depending on the needs of your business and watch your cash flow improve dramatically.

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