Business Services Industry
Steps For Improving Your Firm's Cash Flow
Nation's Business, Nov 1, 1998 by Thomas Love
Maintaining a steady, positive cash flow requires juggling every aspect of a business, from riding herd on accounts receivable to managing inventory. This complex, detail-oriented process can be a challenge for a small business.
Here are tips from American Express Small Business Services, a component of New York City-based American Express Co., that can make cash-flow management less daunting:
* Organize billing schedules for faster receivables. Overdue accounts should be flagged immediately.
* Stretch out payments to suppliers, taking advantage of the maximum time suppliers allow for payment.
* However, take advantage of early-payment incentives if they are offered. And if suppliers don't offer this incentive, ask for it.
* Convert project-by-project clients to a retainer relationship whenever possible.
* Re-evaluate your prices, and don't be afraid to raise them periodically. Customers generally expect small, regular increases.
* Don't buy all in one place; doing so can limit your ability to take advantage of special deals when they arise.
* Tighten your inventory; overstocking can tie up significant amounts of cash.
* Consider leasing instead of buying, which can free up cash and lines of credit that might have better uses.
American Express Small Business Services offers tips such as these for small companies at its World Wide Web site, www.americanexpress.com/smallbusiness.
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