Keeping track of all your payments, incoming and outgoing, is a major part of the cash flow management process. Incoming cash is made from payments received from clients, vendors, asset sales, loans, and interest on idle cash in the bank. Outgoing cash consists of payrolls, invoice payments, daily operation expenses, and bill and interest payments to various parties. 

The strategy and leadership must take a closer look at all of these to get a stronger hold on the cash flow management to shorten the cash conversion cycles and make cash from sales faster than before. Releasing payments from your side as soon you receive services and sending out invoices immediately after making a sale is essential to speed up the cycle. 

No matter how well you know a client or your personal relations with them, you should never extend your credit timelines for anyone. Keep it professional and demand payments exactly when it was agreed upon during the sale. Sending reminders to your clients at regular intervals to remind them of upcoming payments. If you extend credit for one client, it is sure to open up the floodgates, and many more of your clients and vendors will ask for such extensions, and your cash conversion will suffer in the process.  

You can renegotiate with your vendors and service providers about restructuring your payment schedules to stabilize the the cash you have in hand. Though it is always good business to disburse payments as soon as you receive a service and helps builds good relations with partners, you can try negotiating if you have a cash crunch.  

Turning over your sales inventory is a very effective way to shorten your cash conversion cycle. The faster you drive up sales and manage your inventory better, the more money comes into your banks and converts into an actual money-making business. You can even integrate CRM software into your system to keep track of your inventory in real-time and stay on top of your game. Do not keep inventory management for the last moment; pre-plan your steps with a good look at your business process overview.  

Your bank will help you manage your holdings better to get better cash liquidity, speed up your asset sale process, and help in amping up business. There are treasury management options that can help you in your cash collection process from clients and vendors alike. This will further help you assess your financial risks and take measures to mitigate them before they become a major hurdle for your business.  

You can start asking for up-front payments and immediate release of funds when you are running low on cash. You can also use an automated AR system to fasten the process. This will also help with smoothening your supply chain system and getting cash into your bank accounts much faster than before. Do not negotiate with your clients on payment terms, and you can even start fines for making late payments or bounced checks. This will push them to pay on time and help in your CCC process.  

The pandemic has negatively impacted more than 47% of small businesses in some way or the other. Do not let vendors and customers drag you down even more. It is true that many people are not able to pay up on time and that has made businesses give their loyal customers more flexible credit terms. But is this setting up your business for further cash problems? 

Credit terms or scheduled due dates are based on different factors like long-term clients, personal relations, payment history, etc. Though this might help you build a great rapport with the customer, it will gravely impact your cash in hand. Giving out long drawn credit options can be a major roadblock. You need to make some standardized guidelines for credit return and invoice payments to handle this. You can even employ a revenue collection partner who will automate the collection system to avoid further feud.  

Internal audits for your accounts department and is extremely important to ensure good health. This will eventually help in better budgeting and forecasting for the business. In an in-depth internal Accounts Receivable audit you will understand where your business stands. How much money it has in hand to work on your growth plans or how deep you are in bad depth. You need to get these data and analyse things like turnover, payments, collection times, credit times, etc. Not all will you know your business inside out post this audit, you will also know which areas need more focus. Knowing the pressure points in your business will help you make a scalable plan for your way forward.