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Cash is King: Tips to Get Paid Quicker - Building Suppliers

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1 Overview The relationship between a company's profitability and its cash flow, while straightforward, isn't always fully understood. Many businesses, especially sales-oriented companies, tend to manage operations from the bottom line, believing that if sales are increasing, the business is profitable and success is guaranteed. The problem with this thinking is that businesses don't pay their vendors from the bottom line, they pay from positive cash flow. Too often, sales-oriented businesses are so eager to get new clients, that the structure required to get paid for current work isn't fully fleshed out. Suddenly, the funds needed to pay current invoices are not available, and the company is at risk of selling themselves out of business by not properly managing cash flow. Get a grip on accounts receivable The best course of action is to get a firm grip on accounts receivable before it becomes a problem. This will give you enough cash on hand to stay ahead of bills and still have funds left over to invest in the future. Until payment is received (positive cash flow generated) any transaction can't really be considered complete. Too many outstanding customer payments lead to cash flow problems. Getting paid should always be a priority, but before any receivables get collected, several actions are required to help guarantee receipt of that payment. When customers owe you money, there shouldn't be a major investment of time and manpower on your part to get paid. For any accounts receivable process to work, it starts with accurate data collection. This includes information regarding the product or service rendered, price with tax, any discounts that might apply, expected payment date, and any other information relevant to that specific transaction. If this is a manual process or data needs to be applied to different programs, the process can be time consuming and prone to errors. Automation makes the process more streamlined Part of the success of any accounts receivable effort is the ability to establish the right payment terms. The amount of time you offer customers to make their payment should be considered carefully. The longer the payment term, the more credit you are extending to your customers. Conversely, the shorter the term, the quicker you get your money—theoretically. The typical payment cycle for goods or services ranges from 30 to 90 days. Cash Is King: Tips To Get Paid Faster

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