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How To Maintain Your Business Cash Flow

Posted on January 12th, 2016 by Geraldino Bruno

Cash flow in the business is an important part to keep the business going. It is the actual cash that comes from the products that you sell. So to maintain this is a bit of hassle when the customers don’t pay you on time. There are several methods to keep the cash flow constant and properly maintained. See this link http://www.monetiumleasing.com.sg/car-leasing for more information about Automobile Leasing Singapore.

Negotiations

When you sell your goods on credit terms, before going in to using Invoicing Financing in Singapore you need to see if you can negotiate some terms of payment with the customer. Because when you use factoring not only you have to pay a percentage of the invoice to the third party but also lose the customer. Hence to maintain a good customer relationship you need to see if you can negotiate some payment terms such as a monthly payment or a discounted method. Also the next time when you provide credit based goods you need to set up a contract with the payment terms like should be paid within 30 days etc.

Incentives

At the point of sale you can mention that if paid within a week of goods delivery they get a discount on the full amount or if paid within 30 days they get a discount. This type of incentives prompts them to pay on time and it helps to maintain the cash flow. Incentives work on anybody this should work on the customers as well. Especially if you get a any incentives like that form your vendors it is useful that you provide the same to your customers.

Factoring

Factoring is same as Invoicing Financing. You sell your invoices to a third party to get immediate payment on the due invoices. However the problem is that the third party usually takes about 20%- 30% and gives the rest, so you don’t get the full payment. Also they use various methods to get the money from the customer so you have a higher chance of losing that customer. However long term non paid invoices can be a burden and huge hit on the cash flow. This method is good if you are tightly on cash and there are no other options to take.

Set a credit line or overdraft

You can set a credit line with the bank to help you in times of need. However this is only possible if your cash flow is generally in a good state and your revenues are flowing well. The bank will allow a credit or overdraft to help you to maintain the cash flow to smoothly carry on the business. This is really helpful because cash flow is needed to pay salaries, buy stationeries and other day to day office expenses.

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