The measures for improving cash flow in an enterprise are as follows:
i. Fast Payment Incentives
Offering a discount for early payment is a quick and easy way for a business to cut down the time spent waiting for payment and improves cash flow. Typically, a small discount will suffice. Some businesses offer one percent or two percent off if the bill is paid within ten days.
ii. Bill Regularly
Sometimes, businesses-especially smaller enterprises--do not bill regularly. This creates liquidity problems. Having a scheduled billing system in place ensures bills are sent out on time. This also helps clients get used to being billed at the same time each month so they budget accordingly. This provides the enterprise with steady income.
iii. Avoid Slow-Paying Clients
Lose the slow and no-paying clients. They hurt businesses by reducing cash flow and usually become an expense rather than income.
iv. Check Credit History
Conduct a background check to ensure that non-paying consumers are not added as clientele. Have clients fill out a simple credit application listing three credit references. Call references and inquire about the payment history. Only offer credit to consumers who pay on time. Deal with everyone else on a cash basis. Accept credit cards only if the business has a system in place to immediately verify the purchase.
v. Consolidate Loans
Review the rates a id terms for each business related loan. A business with good payment history can often consolidate loans and negotiate for a lower interest rate. This provides a positive impact on cash flow. When consolidating two or more loans, look into changing it into a longerterm one in exchange for lower monthly payments.
vi. Cut Tax Bill
Several legal ways exist to cut down the money that goes to Kenya Revenue Authority Improve liquidity with smarter tax-deductible decisions. Buy a client a thank-you gift rather than taking her to lunch, for example.
marto answered the question on February 4, 2019 at 08:05
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