Friday, May 26, 2017

Few ways to boost the cash flow of a business

       Cash flow is the cash of the company that give-out or receive and might be more important than the revenue and net income that can decide if a company success or failure.  If a business has a expectation to improve its cash flow, some strategies must be implemented in the following.

(Retrieved from: http://www.investopedia.com/articles/personal-finance/061215/10-ways-improve-cash-flow.asp)
  1.       Get rid of old inventory.  Large amount of old inventory tie up a lot of cash and which is hard to sell it at the bought-in price.  Even selling it at discount is better than storing it up for a long-term.  Business should convert those storing inventory into cash immediately. 
  2.        Lease don't buy.  (Retrieved from: http://www.investopedia.com/articles/personal-finance/061215/10-ways-improve-cash-flow.asp)  Although purchase a long-term asset, the value might be raised in the following years.   However, it still take place of your cash flow, lower the cash flow.
  3.       Make the bargin with your debtor.  Make sure your account receivable can be able to receive as soon as possible.  The bad debt may hurt the business's cash flow.  As a consequence of that, set a high interest rate to those bad debtor.
  4.      There is another key element. "Form a Buying Cooperative" Team up with a like-mind business in order to haggle the suppliers to get the lower price for big amount of the inventory.  (Retrieved from: http://www.investopedia.com/articles/personal-finance/061215/10-ways-improve-cash-flow.asp)  What's more, business can still make a attractive deal with supplier and let supplier offer a discount with the business. So that boost the cash flow. 
  5.       Last but not least, the most basic thing is raise the price.  This may cause a concern, if the sale will be lower, if scare the customer and go away.  But as the research from the website that I saw, it is fine to raise the price. (Retrieved from: https://www.entrepreneur.com/article/66010)
        To sum up, these strategies may help to boost the cash flow of business.  These can slightly help the business flee from the cash flow dilemma.  The positive cash flow does effect if a business is success or failure.  However, there still remaining many  can boost the cash flow.

1 comment:

  1. The author tells us how to improve the cash flow of companies, and he lists the point clearly.

    ReplyDelete

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