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Profits are not the only benchmark to determine the success or failure of any business. The amount of cash the entrepreneur of such an establishment has at his/her disposal also important. If this money is not enough, he/she could be in very serious trouble. Such an owner can find it difficult to pay off his/her obligations on time. This will certainly not go well under with the proprietor’s suppliers, workforce and tax authorities. It can have a disastrous effect on his/her reputation in the market over time. In the worst-case scenario, this owner may have no option but to file for bankruptcy.
Steven Rindner – How can entrepreneurs improve their cash flow position?
Steven Rindner is a popular financial specialist in America with 20 years of experience under his belt. He currently holds of office of the Chief Strategy Officer in Scout Media, Inc. This JD graduate from St. John’s University School of Law has been an architect in the growth of many startup companies. Such organizations carry out their activities in the fields of digital media, technology, and marketing.
According to this prominent financial expert, even the lucrative businesses are vulnerable to a cash crunch. Such a problem can disrupt such establishments’ entire market operations over time. The owners of such concerns won’t be in a position to take advantage of lucrative opportunities. This is a situation which most entrepreneurs would like to avoid at all costs. This is the reason why he suggests they should keep in mind the following 3 important tips:
Issue invoices immediately
As soon as entrepreneurs make a successful sale, they should immediately raise invoices on the buyers. It ensures they receive payments for products they dispose of within a very short time. This is because the transaction remains fresh in the minds of such customers. The information on such documents should also be very clear and unambiguous. This includes the date of the sale, description of the products, unit price, quantity, and total sales value. The owners should also clearly state their terms of payment on such paperwork.
Identify the slow-paying customers
Entrepreneurs obviously know that most of their revenues come from the sale of products to regular customers. They have come across the 80/20 rule in the course of carrying out their activities. They should take the necessary steps to identify their slow-paying clients. They should send constant reminders to such businessmen to clear their dues immediately. If they refuse to do so, these owners should impose severe penalties on them. In the worst-case scenario, they can restore to legal action.
Lease an asset rather than buying it outright
Entrepreneurs may need to acquire equipment or real estate in the course of conducting their activities. However, they may not be aware of an important fact. Buying the asset outright can result in a drain on their cash stream. They won’t have enough money to carry out their market operation. This is the reason why they should consider leasing it.
In the opinion of Steven Rindner, entrepreneurs don’t need professionals to tell them the importance of money. These owners realize this resource is the lifeline of their businesses. This is the reason why they go to any lengths to improving their organization’s cash flow position. The above 3 important steps can help them in this endeavor.