Avoiding cash flow problems

No matter what you do, you will struggle with your cash flow if you are not controlling your books and watching your invoicing methods. Customers will take advantage of companies that offer credit and they will wait up until the last day to pay their bill, leaving you with a shorter cash flow amount to operate your business. Here are tips on how you can avoid cash flow problems:

• Know your customers credit. When you are working with invoicing and payment plans you need to take a look at what your customer's credit score is. This score is necessary if you are planning to sell off your invoices to a factoring firm. Factoring firms will not work with bad credit individuals and they may reject your invoices if they know your customers have bad credit and are notorious for missing their payments. Smaller amounts may not be a big deal to your company but larger amounts are going to cause you trouble if you are working with customers that are borrowing more than they can afford. Always run credit checks on your customers if you are extending credit to them.
• Fulfill your orders in a timely manner. Another thing that is going to help you deal with cash flow problems is managing your customer's orders and fulfilling them on time. Most companies will invoice after they have shipped out the order so the longer it takes you to fulfill the order, the longer it will take for your customers to make their payments.
• Poor marketing. Another big reason your cash flow is suffering is due to your marketing efforts. Are you trying to market to your customers and try to let people know you have products that they may be interested in? Without marketing you will be ineffective and you won't have the money coming in to sustain your cash flow. When sales start to dip you need to revisit your marketing plan. If your marketing plan is ineffective, it will show up with your sales. Update your marketing plan and come up with some new strategies to try if you would like to have more money coming in to sustain your cash flow.
• Poor ordering. Some companies waste a lot of money by their ordering abilities. If you are ordering products and you are keeping the vendors on their toes by doing some price comparisons, you are going to lose money. You must do a comparison with other prices in order to save your company money and to make sure you are working with the right vendors. While you cannot expect your existing vendors to drop their prices immensely, they must be able to reduce the cost enough that it will show you loyalty and keep you on as a customer.
• Poor communication. When customers come to order products off your website, is it easy to do? Do your customers struggle to find your shopping cart? Do they have a hard time trying to understand how to navigate your website? You must have a website that is easy to navigate and you need to make sure you include your contact information on a number of things like your brochures, catalogs, and postcards. Always make sure your customers have a way to get in touch with you in order for them to order products from your company.
• Bad management of your books. Use a good software program in order to make sure you don't have cash flow problems. Tracking your books is one of the most important things you will ever do within your business. You must take the time to check them often to see that they are strong and adjust your invoices accordingly to keep the cash flow positive.