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3 Key Strategies to Maintaining Positive Cash Flow

Your business should run smoothly in all areas to be successful, but it’s most important to be financially stable, including having a positive cash flow.

 

Those seeking debt settlement solutions or do it yourself debt settlement would benefit from ways to maintain a positive cash flow. These strategies can also help your business to recover from a bad debt, while implementing new methods that will continue to help the business grow. Consider the following strategies for your small business:

 

  1. Use sales forecasting. It can be difficult to create and use sales forecasting at first, but after a few months you’ll see how sales compare from month to month. For instance, a retail shop owner should track their inventory to see which items move off the shelves quickly and which ones collect dust. Sales forecasting creates a benchmark with which you can compare the business. The more detailed sales forecast the better, and it’s encouraged to forecast by month, category, and revenue using past history. Then use the forecast to budget purchases for the business.
  2. Know your cost structures. Make sure you understand the difference between fixed and variable costs. Fixed costs can limit your cash flow and variable costs can cause debt. If your rent and utilities are a variable cost, talk to your landlord about lowering costs if you’re in a bind. Also shop around for different providers of your variable costs, if possible. Employees that salaried on the monthly payroll are fixed costs, but it would be better to have some employees work part-time or flex time, which would make their payroll a variable cost.
  3. Bill and collect right away. Your invoice will start the payment process sooner if you send it the customer as soon as it’s ready. An inefficient invoicing process can negatively affect how fast your collect your receivables. At the same time, closely monitor collections to decrease how long it takes your receivables to get paid. Monitoring accounts receivable and then contacting customers can help you to get paid on time.

 

If executed correctly, these strategies can become a part of long-term planning that will benefit your business as a whole. They will help you recover from bad debt, as well as those business that are seeking debt settlement solutions or do it yourself debt settlement.