Tips On Improving Cash Flow

QuickBooks’ and other software’s A/R and A/P reports can project cash flows by calculating the timing of collections and payments. But projecting cash flows is not much help unless your collections occur on a timely basis.

To improve cash flows:

• Bill customers immediately. Any procrastination in sending invoices becomes a built-in delay to receiving payment(s).
• Require or request retainers or deposits. Determine what percentage customers would be willing to pay upfront.
• Consider credit cards. If you have doubts, run a cost/benefit analysis to determine whether
  receiving payments more promptly can more than offset card fees.
• Consider prompt-payment discounts. For consistently late customers, offer the discount after a certain number of timely payments.
• Require COD for consistently late payers. They may be in financial trouble, and COD eliminates the risk of extending credit.

Source: Guy McPhail, Improving Your Cash Flow, www.smallbusinessreview.com/finance/improving_cash_flow