Maximize Cash In
- Whenever possible, avoid accounts receivables. Get payment in advance or upon delivery.
- Send statement out quickly. Delayed statements delays payment.
- Have a solid collection strategy and follow it. Let the customer know you care about payment.
- Review credit policy, especially on larger customers. Sales do not help if you don't get paid.
Minimize Cash Out
- Pay accounts payable on time, but not ahead of time.
- Use electronic payment to avoid early payments.
- Compare the costs of renting or leasing to buying.
- Negotiate everything. Your vendors are also anxious about the economic climate. This can be a good time to renegotiate prices, terms, and delivery schedules.
- Consider temporary and flexible hours for employees. Lay off staff when necessary. Keep your employees informed.
- Find vendors who can supply smaller quantities quickly. This will reduce overall inventory levels.
- Dispose of obsolete inventory - even at a loss. Holding worthless inventory uses up your cash.
- Keep inventories and assets (such as computers) secure. Have appropriate processes to avoid theft and fraud.
Stay on top of cash
- Have a solid process to verify daily cash receipts. Don't tempt your employees with poor processes.
- Take complete control of check writing. Personally evaluate every penny being spent. Eliminate or delay expenditures where ever possible.
Keep your banker informed of your status. Make him or her comfortable that you are doing an effective job of managing the business.
Evaluate your personal budget along with the business. Avoid and reduce personal expenditures and lower your withdrawal from the business. Meet for a free, confidential talk with a SCORE Counselor like Bob Paul if you run into cash flow or debt problems.