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CASHFLOW OR CASH FLOW HOW TO
You will find more tips in our article on how to deal with unpaid invoices. Instead of waiting for an outstanding invoice to be paid, you can enter into a transparent dialogue and make agreements.
CASHFLOW OR CASH FLOW PROFESSIONAL
Make sure you have professional buyer management and build a relationship with the most important contact person within your customer's organisation. For some businesses, this is the simplest. Tight management of outstanding invoices is another method of freeing up money.It is preferable to implement more efficient, just-in-time processes and inventory reduction.
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Inventory build-up can be an appealing option as orders increase, but it does require capital and is therefore a risk. Increasing the inventory turnover is a method widely used to cut costs and free up money for investment.Price increases can be a problem in competitive markets, so it's better to look at the sales mix first: can sales of higher-margin products be increased? Alternatively, you can add value that will justify a higher price. Higher margins mean increased liquidity, provided that customers continue to pay under the current terms. Improving your sales margins and profitability is one possible strategy to improve your cash flow.A cash buffer helps in situations such as the breakdown of a major piece of equipment, or late payment/non-payment of a large invoice. Keeping a cash buffer can also be a useful habit. This will give a clear picture of the financial position of your business, enabling you to identify problems and decide how to avoid cash flow issues. This creates much greater awareness of likely opportunities and potential threats. By bringing all the information together in a cash flow statement and making a forecast of future cash flow, you will be able to perform a good cash flow analysis. An example can be found in our free e-book on cash flow management.Īs part of good cash flow management, you should create a cash flow statement. A useful tool here is a cash flow statement and forecast. As long as the first amount is higher than the second, you have a positive cash flow. To calculate your cash flow, put two amounts next to each other: the money coming into your business and the money you spend.