Tips for managing cash flow…
Most businesses experience slow cash flow at some point. Knowing how to prevent or handle this situation can be a challenge for even the savviest businessperson. Here are some tips to help navigate through these choppy waters:
- Before doing business with a company check a potential customer’s credit references ahead of time. Have a thorough understanding of a potential customer’s business finances so you can find out the risk before, not after you try to collect on an invoice. Have the potential customer fill out a credit application, ask for bank and trade references.
- A business is not going to get paid until they send their client an invoice, so bill your customers sooner rather than later. On average, companies are paid within 45 days (about 1 and a half months) of the date they provide a service or deliver a product.
- Specify the payment terms boldly on your invoice. Typically, standard payment terms are net 30-days but for some industries, terms can be as few as net 10-days.
- Do not be afraid to ask for your money.
- Take advantage of programs and services designed to help with slow cash flow such as factoring. For a small fee factoring companies can provide cash up front for creditworthy invoices, so companies do not have to wait to be paid for their service or product.
The American Bank Business Finance team are experts in small business finance, providing accounts receivable financing/factoring programs for companies experiencing cash flow problems. *
*Subject to credit approval.
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