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If you are looking to improve your business cash flow their are a few things that you can do and we will talk through these separately. In essence you are looking to speed up the flow of cash into the business while slowing down or eliminating the flow of cash out of the business. Let’s take a look at the different areas that can assist:

Credit control – if you are offering credit terms to your customers then it is important to ensure that you are paid on time. You have provided a good service or product and you are entitled to be paid. You have even been generous enough to offer credit terms so it is not asking a lot to be paid on time. Slow payers can have a real impact on the cash flow of your business. In reality if you are dealing with large organisations that have payment runs, etc.. it can be hard to dictate payment terms but you should still stay on top of it. Efficient credit control improves cash flow and importantly reduces the risk of bad debts.

Invoice Finance – an invoice finance facility can assist in smoothing your cash flow by allowing you to access the cash tied up in your invoices. If you choose a factoring facility it can also ensure that your debts are collected effectively.

Supplier terms – are your suppliers offering credit terms? It is worth shopping around as some suppliers will offer extended terms or better credit limits to secure your business.

Stock – are you carrying too much stock in your business? Can you order better than you currently do? Again a new supplier may have a better way of delivering or managing your stock levels.

Bad debts Рbad debts have a real impact on businesses both in terms of profitability but also on cash flow. To manage bad debts you can use effective credit check and credit control. A factoring facility will do both of these for you. Another consideration is a credit insurance policy to insure against bad debts.

Purchasing – it is interesting to see businesses purchasing capital equipment or machinery with cash. Unless you have a very cash rich business it may be far better to consider a lease or hire purchase agreement to spread the cost of the purchase over it’s economic life or at least a more suitable period.

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