Maximizing Cash In: The Healthy Heart of Business
BY Robert I. B. Kanyamanza
This section looks at three ways to maximize cash from sales in a business.
The first is fairly straightforward: grow revenues through all the product development, sales and marketing expertise you can master. Making sales is just the first step in the right direction.
The cash management perspective focuses on the two subsequent steps on maximizing “cash in”: making sure costumers pay you (collecting your receivables) and turning those cheques and transfers into cash into your bank account (converting cash as quickly as possible).
CASH FLOW MANAGEMENT
1. GETTING PAID
Bad debts and late payments can turn even good months into liquidity struggles. Receivables collection is one of the most common shortcomings in cash management, so it is a good place to start.
C. Escalation Process
Look carefully at your practice of working on credit for customers that are chronically late or have debts exceeding 90 days. If you decide to stop work, this action alone may persuade some debtors to pay up, but you may have to go further.
ROBERTKA Business Solutions experts advise, If you believe you are being stalled, that you progressively escalate your payment requests through these steps:
- pre-collection letters,
- demand notice,
- outsourced collections, and
- legal action
At some point, you may want to consider involving professional debt collectors either as advisors or to act on your behalf.
In addition, you may also have rights to seize inventory or to request payment from your customers’ customers. Check with your legal advisor.
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Getting Paid: A. Basic Collection Practices
Getting Paid: B. Your First Line of Defense
The Concept of liquidity
The Secret to Maximizing Cash Flow
Getting Paid: In Between Payments Calls