Building Up Cash Flows
With more than half of the year 2006 gone, businesses must re-evaluate their cash flow strengths and weaknesses. Most businesses will either gain or lose profits during the final months of the year, so preparation is a must either way.
Studies show that cash flow, or a lack thereof, can make or break a business. For 2006, there are some definite cash flow woes, and businesses across the nation must avoid these if they are going to be around for 2007.
Karlene S. Robinson of KPR Funding Solutions, LLC, (http://www.kprfundingsolutions.com)reveals these woes and some quick tips to improve cash flow for the remainder of 2006. Study these tips to find ways to improve cash flow on either side:
1. Build a Cash Reserve: Whether a business is just starting out or fully established, a cash reserve is a must. This is simply a set amount of cash put back into savings for emergencies.
2. Re-evaluate Business Cash Movement: Cash moves in and out of the business bank account for items such as invoicing, outgoing bills, cash jobs and payroll. Business owners need to know where their cash is going and where it is coming from.
One example is to re-evaluate invoicing techniques. Studies show that invoicing for long periods of time can result in non-payment. There is only a 70 percent chance to collect on an invoice that's more than 60 days old. Invoice deadlines may be able to be changed and small discounts can be offered to clients for early payment to increase overall cash flow.
3. Inventory Check: Business owners should take a look at their inventory list to see if there are products that could be moved faster by selling to another vendor or at a discount to present customers. Inventory that sits too long could become that much-needed money right now.
4. Energy Costs: Every business must look at energy costs as a serious cash vacuum after the astounding rise of oil and fuel prices of 2006. Whether it is the cost to operate machinery, heat/cool the business facility, or buy fuel for company vehicles, thousands of dollars can probably be saved by analyzing the current energy consumption methods.
5. Debt Management: Manage the business debts wisely. Refinance at lower interest rates. Keep payments up-to-date so no penalties will have to be paid. Renegotiate payment plans that are hurting your cash flow. Debt does not have to hinder the business. It can be managed and overcome if the effort is put forth.
"Entrepreneurs can keep their company afloat when difficult times hit if they take these steps to improve cash flow. Adequate cash flow is the key to long-term success," states Robinson.