What causes cash flow problem?

Cash is the oxygen of the organization.

Here are some common causes and solutions of cash flow problems in small business:

  1. Lack of Payment Term Discounts
    If you deliver product or service without upfront payment, it reduces your cash reserve. Always offer customers discount in order to encourage them to make their payments quicker to receive a discount. Always ask the question “is my actions adding cash or burning cash?”
  2. Lack of Tracking
    You cannot achieve success in business without tracking result. Work with a software vendor to track the areas of business (i.e. inventory management, supply ordering, and procurement) where you can improve cash flow to reduce waste and improve turnaround times.
  3. Failure to Perform Credit Checks on new clients
    Never do business with a new client without checking their credit. This way you will avoid an untimely payment or a payment default from a business with a poor credit history.
  4. Slow Product or Service Turnaround Times
    Shorten the delivery times of products or services to customers to maximize the level of potential profit.
  5. Taking Cash Instead of Credit
    Change business structure to where your only methods of payment are credit cards or online banking systems to decrease the wait time for business payments by check.

Summary



About this author  An entrepreneur who inherited his passion for lifelong learning from his parents, Russell Sarder founded NetCom Learning (www.NetComLearning.com) in 1998. Sarder has led NetCom to be recognized as a technical and business training leader. Within a decade, he has grown the company into an over multimillion revenue company. Driven by Sarder’s passion and dedication, and differentiated by its focus on client excellence, the NetCom Learning has successfully aligned itself with industry leaders such as Project Management Institute, Microsoft, CISCO, CompTia, EC-Council, Autodesk, Adobe, Check Point, Novell, Oracle, and IBM. NetCom Learning was listed as one of the fastest growing private company in USA by Inc 5000 Magazine in 2008. NetCom also received CPLS of the Year 2007 award by Microsoft and EC-Council Circle of Excellence award in 2010. Sarder is also Chairman and CEO of Sarder Inc., a holding company that includes NetCom Learning, NetCom CMS (Central Management Software), Ebiz9, Technology and Training magazine and other smaller companies. Microsoft Chairman Bill Gates, Microsoft CEO Steve Ballmer, CISCO CEO John Chambers contributed to his technology magazine. Sarder is also the creator of Netcom’s Sarder Scholarship Program, awarded monthly to an ambitious individual who wishes to either begin or advance an IT career. Sarder is a frequent speaker on topics of learning culture and business management. As a motivational speaker, he has appeared in newspaper reports in the Daily News, the New York Times, and the New York Post. His TV appearances include CBS Market Watch, Yahoo Finance and New York One. Sarder has also spoken at major industry events organized by CompTia, Microsoft, and NetCom Learning. Sarder is an avid reader and passionate life-long learner who has followed in the footsteps of his father. A denizen of New York City, Sarder also lives a healthy lifestyle and writes learning books in his spare time. Specialties1. Leadership Development 2. Entrepreneurship 3. Investing in new business 4. Strategy Development 5. People Development 6. People Management 7. Team Building 8. Business Management 9. Profit Management 10. Information Technology Training 11. Business Management Training 12. Professional Speaking


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