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Cash Flow



        Cash Flow Problems -What Steps to Take Immediately

by M. Le' Mont

Just because your company is making money doesn't mean that it's profitable.
 Cash flows in and out of a business everyday but its essential to have more
of it flowing in than out.   

Wikipedia, refers to cash flow, "as the movement of cash in or out of a business,
a project, or financial product.

Most cash flow problems occur when sales are rolled as accounts receivables.
On the surface $1 million dollars of account receivables can make any financial
statement look good, but if you dig a little deeper and look at the past -due
accounts it could tell a different story.  

A high delinquency rate (over 15%) can make it difficult to pay bills and can be
a drain on resources.  If you got paid for sales the instant, they were made, you
wouldn't have a cash flow- problem.

The basic idea behind improving cash flow is to improve the speed with which
you turn materials and supplies into products,inventory into receivables, and
receivables into cash.  

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There are several steps that you can do to increase cash flow:

Immediate Action:    Apply for a commercial loan before your
financials get severely in the red. Banks  loan money to companies
that they feel don't  need it.  Large corporations always have  
access to a line of credit to meet short term cash flow problems.

You can apply online  with C-Loan , your request will be submitted to 500
commercial lenders. Click Here 


  1) Turning over hard to collect account receivables to a third party collection
agency at the 60, 90, 120-day mark.
You must stop hoping that these accounts
are going to pay after you have made repeated attempts.
It becomes a drain on
cash flow and resources

The longer you wait, the harder it is for a collection agency to recover your money.
See Rules of Business

Find a third party collection agency that has a customer friendly approach and
willing to work with your customers.  One that many of our clients use is

 2) The second most rapid way of improving cash flow is to delay the outlays of
cash as long as possible while encouraging anyone who owes you money to pay
as rapidly as possible. You must follow the example of big corporations.  

They are slow payers always anticipating a slowdown in the economy with millions
sitting in the bank.  Even the federal government is a slow payer; ask any vendor or
 supplier who has a government contract.


3)  Cash Flow Projections -- you must project 1- 2 years of expected cash flow and
anticipate changes in the economy and technology.  You must also secure bank loans
or lines of credit before  you actually need them.    

One well known computer manufacture learned this lesson the hard way in the early
90's, when it almost filed bankruptcy because it couldn't get a bank loan during an
economic downturn.

Today the company keeps over a billion dollars in cash and refuses to give in to the
pressures of Wall Street of paying a dividend to its shareholders. It hoards its cash in
the event of an economic downturn or changes in technology.


                                  Other Methods of Improving Cash Flow

                                       Invoice Early

In recessionary times, it is important to invoice your customers early.  You must follow
up with a phone call to make sure the customer received the shipments and to encourage discounts for paying early.  

                                        Invoice Often

If you normally send out invoices once a month, you want to consider sending them
out  once a week or twice  a month. This keeps it on the customer's mind that you
need your money and being late is not acceptable.

                                        Courtesy Calls

The first call should be a courtesy call to make sure the invoice was
received and a reminder of the discount for paying early.  A second call
should be made if payment is not received on the day the payment is due.

                                        Collection Calls

You must take an aggressive approach on past-due accounts before they fall
seriously behind. The chance of collecting the accounts dwindles each day the
account remains delinquent.

First payment defaults, (customers with no payment
history) should be released to a collection agency at the 45-day mark without

Phone calls should be made at least two or three times a week, until
accounts are turned over.  

Once an account becomes 30 days past due, a collection letter should be sent
 to the customer giving   notice that the account will be placed with an outside
collection agency for further steps if the account is not paid by a specified date.


At the 60-day mark, turn over accounts to a collection agency.   Depending on
the demographics, a collection agency should recover 25-30% of the total dollar
amount placed with them. 

Cash Flows Statement

Review your financial statements on a monthly basis.  It should
include  cash flows statement showing whether you the movement
of cash within your company.

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Safety in Numbers and Law of Averages.

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M. Le'Mont is a Writer, Network Marketer, and IBO of 14 websites.

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