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Managing your cash flow
This article looks at ways to manage your cash flow effectively by getting money sooner from customers, waiting to pay bills until the last possible moment, keeping money in one centralized location, managing your accounts payable, receivable and inventories effectively, and making your money work for you.These tips come from the well acclaimed Les Masonson, Author o f Cash, Cash, Cash: The Three Principles of Business Survival and Success.
First, let's look at collecting money owed to you in a fast and efficient manner.Below are a list of tips and suggestions to help you do this.
Next, let's look at waiting to pay until absolutely necessary. Here are a few suggestions to help you hold on to your money longer.
Finally, remember that inventory isn't cash. Make sure you are forecasting as accurately as possible so you don't have a huge inventory on hand. Try to hold off ordering until it is absolutely necessary without disrupting business. Find a way of getting rid of obsolete inventory. Make sure that you keep money on hand for emergent situations for your business. Try not to keep too much money in your accounts.Instead keep a healthy balance of cash and use the rest to pay off loans or outstanding debts. There are a few warning signs that can help you determine if your cash flow management needs some adjustment. First are your sales. Is it increasing, decreasing or remaining constant?Next is your bank balance. Is it getting low?Third involves the volume of your receivables. How much do customers owe you?Is the amount getting out of hand? How much past due are certain clients?Lastly, looks at your payables. How much do you owe?Is it more than what you are bringing in? Use the tips and suggestions provided above and watch the warning signs closely.If you keep on top of your cash flow management you have a greater chance at success with your business.
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