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I cannot manage a positive cash flow.

25 Diya Selva cash flowDay-to-day operations become difficult or impossible without proper cash flow. This is what actually runs your business by fuelling activities like stocking inventory, paying rent and utilities, paying salaries and other expenses.

Cash flow has to be positive. Positive net income creates positive cash flow and negative net income, that is when you’re on a loss you have negative cash flow.

Here are four simple and sure way methods that I use to keep cash flow optimum. Yes, it does sound easy on paper, but with due diligence, you should be able to stay afloat easily too.

Putting a speed on receivables increases cash flow.

Invoice and receive payments in advance before you start a service or at the same time that you sell products. Selling something today for future payments chocks up available money. Not to mention, might produce several dishonest customers.

If you have regular customers, require a credit card on file for each customer so that you don’t have to harass them for payments. Create a policy of cash on delivery.

Take full charge of managing payables.

Pay bills on due date or a couple of days ahead of the due date rather than a month ahead. Keep cash with you for as long as possible. If you’re short on cash talk to your suppliers about a delayed payment now and then. Negotiate and renegotiate prices to make sure you’re paying not more than necessary for services.

Measure cash flow periodically.

In other words, watch your cash flow statements. Identify upcoming expenses and keep cash ready for such times. For example if you are a retailer who buys a lot on discounts when there’s an annual trade show, save up money to buy inventory on the steepest discounts.

Pull through deficits.

Of course, preparing future projections is not an easy task because future is unpredictable and there is always going to be fluctuations. Stock up some cash away in an account to fall back on, should need arise for improved cash flow. Banks are always wary of businesses with negative cash flow statements, requesting loans, so unless you have a very good credit history, borrowing money might not be a feasible possibility.

Make all crucial payments in time to save your assets and credit worthiness. As long as business is brisk and money flows in and out without problems, your business should be a smooth sailing ship.

 

 

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