Look at this picture they are trying to make the cash flow positive but you can see that the obligation of previous month is still there then how can they make cash flow positive?

1) Negotiate with your supplier for delayed payment. For instance piggyback your this month payment to next month ending so that you can get time to collect money from your customer.

2) Cut unnecessary operational cost. Don’t purchase any items which are not critical for the business. For example your company need transportation it is not a good idea to buy vehicle, instead hire it. Once you hire a vehicle you don’t need to worry about its maintenance, tax insurance etc.

3) Be selective about customers. Try to get customers with good credit history. You can buy those reports from credit agencies where in you will get the full details of payments, credit ratings etc. You can also select customers without good credit history by availing a deposit for using the service.

4) Accurately raise the invoices. Poor administration and handling of invoices delays payment.

5) Re-arrange customer payment cycle. This is very effective if you are doing some service business with a monthly payment. A simple example is if you can re-arrange the cycle and raise the invoice by 20th of every month with a due date on next month beginning collection can be very effective because most of the customers will get salaries at the end of the month so can pay money easily.

6) Offer early settlement discounts. Offer discounts for early settlements, but the downside is it will affect the profitability. Remember one penny today is not one penny tomorrow it is much more depends upon the interest rate. In this case we have to take net present value of the payment into consideration.

7) Compel customer to avail direct debit by offering some difference in transaction charges.

8 ) Diversify your customer base. It is not good to have a 2 or 3 service contract to run a business. Payment delay in any client will affect your cash flow there might be chance for the business to meet financial obligation.

9) Payment reminders, this is very effective sending reminders to the customer compels for payment.

10) Use a third party to collect your debts, make sure that the agency is reputable and recommended by people.

11) Consolidate your loans, if your business have multiple loans consolidate the loan with a single bank and negotiate the interest rates.

Remind Cash is the life blood  of business, so if you are not able to manage cash inflows and outflows don’t do business.