Tactics to improve your business financial state

Businesses all over the world have come to realize that if they do not keep a good handle on their finances, their business will fail. It really is the little things that make the most difference when we are trying to improve our financial state. Here are some common sense tactics to improve your business financial state.

Tactic #1: Improving Collections
Instead of waiting for a payment to your business to be overdue why not call the customer the day before and ask if they have received the invoice? It may take a minute or two out of your day, but it sure beats not receiving any money the next day causing you to make late payments on something else. If for some reason they didn't get it then fax it to them immediately so they can get the payment to you on time. This can drastically increase and improve your collections from 100+ days over due to about 45.

Tactic #2: Take advantage of short term cash flow
Deposit the money you receive daily. Why? Because every dollar you have in the bank gains you interest; even if it is just 2 percent it is still interest and a little extra money for you.

Tactic #3: Accounts Payable
It is possible to work out payment agreements or payment options with each of your vendors. A longer payout over a year or so will reduce your accounts payable balance sheet which in turn improves your working capital position. This will make your lenders and any investors very happy.

Tactic #4: Improving your Cash Flow
Improving your cash flow is always going to improve your financial state. There are a number of different ways to do this:


• Require a down payment on projects so that your customers are paying for the project and not you.


•  Set your terms to be payment in full upon completion. Never extend payment 30 or even 60 days past the allotted work time.


•  Negotiate the terms with vendors for 30 days or more. This gives you the opportunity to complete the work, bill and receive money from your customers and then pay your vendor.


•  Set up a collection process and follow through with it. Keep in mind that when a customer does not pay you on time it's your cash, and in order to improve your financial state you need to get paid.

 Set up a line of credit with your local bank in case you have an emergency and need the money. Lenders rates are usually less than paying late fees on vendors.

Tactic #5: International Payments
If you are just running your business nationally then it should take about 42 days to collect payment form other U.S. companies. If you are dealing internationally then this time is considerably slower. Depending on which country you are doing business with will depend on how long it takes. It can be anywhere from 100 days in Chile or Morocco, to 300+ days in Iran.

Tactic #6: Cutting Costs
I realize that this is a very general statement so let me tell you some of the areas where you can think about cutting back.


• Telephone calls. Instead of using the phone to incur long distance rates use the internet instead and send emails.


•  Office Supplies. Go through past invoices and figure out which supplies make up more than 80% of the dollars spent. Try doing your shopping at a super store such as Staples or Costco.


•  Printing. You shouldn't be spending more than $500 dollars on printing jobs. Shop around and find local printers with cheaper rates, or try doing an online search. It really pays to shop and compare prices. Some places will price match if you find it cheaper and that can definitely help your business financial state.

You don't have to be a genius to figure out if you are spending more than you're making. Look at the numbers and figure it out. I hope these 6 tactics will help you improve your business financial state.

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